Creating value by using
our financial expertise
to do good
ANNUAL
RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2019
AR
CONTENTS
1
MESSAGE FROM OUR
CHIEF EXECUTIVE
2
RESULTS
PRESENTATION
54
2019 RESULTS
COMMENTARY
66
FINANCIAL
RESULTS
67
Financial highlights
68
Consolidated statement
of comprehensive income
69
Consolidated statement of
financial position
70
Consolidated statement
of changes in equity
72
Return on equity drivers
73
SEGMENTAL
ANALYSIS
74
Our organisational structure,
products and services
76
Operational segmental
reporting
78
Nedbank Corporate and
Investment Banking
81
Nedbank Retail and
Business Banking
93
Nedbank Wealth
96
Nedbank Africa Regions
99
Geographical segmental
reporting
100
INCOME STATEMENT
ANALYSIS
101
Net margin analysis
105
Impairments
108
Non-interest revenue
110
Expenses
112
Non-trading and capital
items
112
Taxation charge
112 Preference shares
113
Hyperinflation
115
STATEMENT
OF FINANCIAL
POSITION ANALYSIS
116 Loans and advances
122
Investment securities
123
Investments in associate
companies
124
Intangible assets
126 Amounts owed to depositors
129 Liquidity risk and funding
132 Equity analysis
133
Capital management
136 Economic capital adequacy
137
External credit ratings
139
140
SUPPLEMENTARY
INFORMATION
Earnings per share and
weighted-average shares
141
Nedbank Group employee
incentive schemes
142
Long-term debt instruments
142
Holders of additional tier 1
capital instruments
143
Shareholders’ analysis
144
146
Basel III balance sheet credit
exposure by business cluster
and asset class
Nedbank Limited
consolidated statement of
comprehensive income
147 Nedbank Limited
consolidated statement
of financial position
147
Nedbank Limited
consolidated financial
highlights
148 Definitions
150
Abbreviations and acronyms
IBC
Company details
MESSAGE FROM OUR
CHIEF EXECUTIVE
GOOD STRATEGIC AND OPERATIONAL PROGRESS AND SOLID FRANCHISE
FUNDAMENTALS, BUT FINANCIAL PERFORMANCE BELOW EXPECTATIONS
In 2019 SA economic growth was much
slower than expected as recessionary-like
conditions prevailed. This was mainly due
to severe and frequent power outages, the
unsustainable fiscal trajectory and ongoing
policy uncertainty, combined with a
deteriorating global outlook. Under these
difficult domestic conditions, company profits
and household finances deteriorated during
the year, resulting in subdued credit demand,
lower transactional volume growth and rising
defaults in the SA banking industry.
In this environment Nedbank Group’s financial
performance was below expectations
as headline earnings declined 7,3% to
R12,5bn and the group produced an ROE
(excluding goodwill) of 16,0%. In addition to the
challenging environment, headline earnings
were impacted by additional items in
the second half of the year, including
hyperinflation in Zimbabwe (R142m
headline earnings impact) and the raising
of impairments against recoverability of
recognised intercompany legacy debt
(R44m), the exercise of an option that
will increase our shareholding in Banco
Único (R140m) from 50% plus one share to
approximately 87,5% (subject to regulatory
approval), the revaluing of a number
of private-equity investments as the
underlying investee company performance
was weaker and public market multiples
declined (R238m), and the increase in
impairments to just above the midpoint
of our target range of 60 bps to 100 bps
as a result of increased impairments
raised on certain CIB watchlist items and
an increase in the central impairment.
This was partially offset by good cost
management due to the ongoing benefits
from optimisation of processes and
operations as part of our digital journey,
and as a result our cost-to-income ratio
improved from 57,2% to 56,5%.
We continued to make good strategic and
operational progress throughout the year
and produced solid balance sheet growth
with advances up 7% and deposits growing
9,5%. A key focus was the operational
rollout of our digital onboarding capability
for individuals visiting branches and
using the Money app and online banking,
alongside our ability to sell current
accounts and personal loans digitally,
as well as pilots for cards, investment
products and overdrafts. In addition,
we launched our refreshed loyalty and
rewards programme together with various
market-leading digital innovations. As our
clients began to experience the value
from our digital journey and improved
service levels, Nedbank ended the year
as the only SA bank to have improved its
Net Promoter Score (NPS) and on client
satisfaction metrics became the second
highest-rated bank in SA.
SA’s economic growth prospects remain
subdued, undermined by persistent energy
constraints, weak government finances
and slow progress on structural reforms
combined with a weaker outlook for global
growth. In this difficult SA macroeconomic
environment, where we currently forecast
OVERVIEW OF OUR ANNUAL RESULTS
GDP growth in 2020 to be only 0,7%, and
given our 2019 base, our guidance for
growth in diluted headline earnings per
share for 2020 is to be around nominal GDP
growth. Our medium-to-long-term financial
targets for ROE (excluding goodwill) and
the cost-to-income ratio in 2020 were
communicated to the market in early 2018,
when GDP growth was forecast to be
materially higher than what has transpired,
and as a result, credit growth and interest
rates (endowment impact) were also
forecast to be higher than what took place.
To reflect the deterioration in these metrics
since 2018 we have revised the timelines for
achievement of these medium-to-long-term
financial targets to be more reflective of
the current weaker economic environment,
which we expect to persist. For ROE (now
including goodwill), our medium-term target
(two to three years) is now greater than
17% and our long-term target (five or more
years) is greater than cost of equity plus
4%. For the cost-to-income ratio we are now
targeting less than 53% in the medium term
and less than 50% in the long term as our
digital journey matures and enables ongoing
efficiencies.
Mike Brown
Chief Executive
HEADLINE EARNINGS
▼ 7,3%
R12 506m
DHEPS
▼ 6,3%
2 565 cents
ROE
(excluding goodwill)
▼ 16,0%
(2018: 17,9%)
DIVIDEND PER SHARE
1 415 cents
▲
(2018: 1 415 cents)
LOANS AND ADVANCES
▲ 7,2%
R764bn
AMOUNTS OWED
TO DEPOSITORS
▲ 9,5%
R904bn
AUM
▲ 11,4%
R331bn
CET1 RATIO
▼ 11,5%
(2018: 11,7%)
GROSS OPERATING
INCOME
(including associate income)
▲ 3,0%
EXPENSES
▲ 1,7%
CLR
▲ 82 bps
(2018: 53 bps)
BBBEE
Level 1
▲
(2018: Level 1)
NEDBANK GROUP – ANNUAL RESULTS 2019
1
ANNUAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2019
NEDBANK GROUP LIMITED – Annual Results 2019
OVERVIEW
▪ Good strategic & operational progress
▪ Solid underlying growth in the franchise
▪ Financial performance below expectations
Mike Brown
Chief Executive
NEDBANK GROUP LIMITED – Annual Results 2019
2
1
2
NOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 RESULTS
PRESENTATION
Good strategic (cid:9) operational progress(cid:15) but financial performance
belo(cid:90) e(cid:91)pectations
Good strategic (cid:9) operational progress
▪ Te(cid:70)(cid:75)n(cid:82)l(cid:82)(cid:74)(cid:92) (cid:76)m(cid:83)lementat(cid:76)(cid:82)n (cid:82)n t(cid:85)a(cid:70)(cid:78) (cid:9) (cid:71)el(cid:76)(cid:89)e(cid:85)(cid:76)n(cid:74) e(cid:91)(cid:83)e(cid:70)te(cid:71) (cid:69)ene(cid:73)(cid:76)ts.
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Solid underl(cid:92)ing gro(cid:90)t(cid:75) in t(cid:75)e franc(cid:75)ise
▪ S(cid:82)l(cid:76)(cid:71) (cid:69)alan(cid:70)e s(cid:75)eet (cid:9) AUM (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (a(cid:71)(cid:89)an(cid:70)es (cid:14)7%(cid:15) (cid:71)e(cid:83)(cid:82)s(cid:76)ts (cid:14)9.5% (cid:9) AUM (cid:14)11%).
▪ St(cid:85)(cid:82)n(cid:74) (cid:73)(cid:82)(cid:70)us (cid:82)n (cid:70)(cid:82)st mana(cid:74)ement (cid:14)2%(cid:15) PPOP (cid:14)3% (cid:9) (cid:45)A(cid:58)S (cid:14)1%.
▪ (cid:38)ET1 (cid:85)at(cid:76)(cid:82) at t(cid:75)e m(cid:76)(cid:71)(cid:16)(cid:83)(cid:82)(cid:76)nt (cid:82)(cid:73) (cid:69)(cid:82)a(cid:85)(cid:71)(cid:16)a(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)e(cid:71) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e (10.5 t(cid:82) 12.5%) (cid:9) (cid:73)ull(cid:16)(cid:92)ea(cid:85)
(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71) ma(cid:76)nta(cid:76)ne(cid:71).
(cid:50)verall financial performance belo(cid:90) e(cid:91)pectations – (cid:43)E (cid:71)(cid:82)(cid:90)n 7%
▪ (cid:43)E (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92)(cid:29)
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t(cid:75)e TT(cid:38) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e (60 t(cid:82) 100 (cid:69)(cid:83)s).
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NEDBANK GROUP LIMITED – Annual Results 2019
3
NOTES:
(cid:36) reminder – st(cid:85)(cid:82)n(cid:74)e(cid:85) e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:71)e(cid:83)en(cid:71)ent (cid:82)n st(cid:85)u(cid:70)tu(cid:85)al (cid:85)e(cid:73)(cid:82)(cid:85)ms(cid:15)
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P(cid:85)(cid:82)(cid:74)(cid:85)ess (cid:82)n st(cid:85)u(cid:70)tu(cid:85)al (cid:85)e(cid:73)(cid:82)(cid:85)ms
(cid:9) (cid:83)(cid:82)l(cid:76)(cid:70)(cid:92) (cid:70)e(cid:85)ta(cid:76)nt(cid:92) – t(cid:82)(cid:82) sl(cid:82)(cid:90)
Earl(cid:92) stages
of an institutional
turnaround in S(cid:36)
Structural
reforms
(cid:9) polic(cid:92)
certaint(cid:92)
Improved
levels of
levels of local
Increased
(cid:9) foreign
investment
business (cid:9)
consumer
confidence
Increased
levels of
inclusive
economic
gro(cid:90)t(cid:75)
(cid:45)ob creation
(cid:9) reduced(cid:29)
(cid:237) unem(cid:83)l(cid:82)(cid:92)ment
(cid:237) (cid:83)(cid:82)(cid:89)e(cid:85)t(cid:92)
(cid:237) (cid:76)ne(cid:84)ual(cid:76)t(cid:92)
Government(cid:15) business(cid:15) labour (cid:9) civil societ(cid:92) (cid:90)orking toget(cid:75)er to create a more prosperous S(cid:36) for all its people (cid:171)
(cid:171) underpinned b(cid:92) improved skills (cid:9) educational outcomes(cid:17)
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 3
S(cid:36) economic gro(cid:90)t(cid:75) in (cid:21)01(cid:28) muc(cid:75) slo(cid:90)er t(cid:75)an e(cid:91)pected
S(cid:36) GD(cid:51) gro(cid:90)t(cid:75) forecasts revised1 (%)
(cid:46)e(cid:92) drivers in (cid:21)01(cid:28)
▪ (cid:38)u(cid:85)(cid:85)ent SA e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:71)(cid:82)(cid:90)ns(cid:90)(cid:76)n(cid:74) t(cid:75)e l(cid:82)n(cid:74)est
s(cid:76)n(cid:70)e (cid:85)e(cid:70)(cid:82)(cid:85)(cid:71)s (cid:69)e(cid:74)an (cid:76)n 1945.
2.0
▪ Unsusta(cid:76)na(cid:69)le (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:9) (cid:82)(cid:83)e(cid:85)at(cid:76)(cid:82)nal (cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)n
1.8
(cid:82)(cid:73) Es(cid:78)(cid:82)m.
1.3
0.7
0.3
2019
2020
2021
(cid:41)e(cid:69) 19
A(cid:83)(cid:85) 19
(cid:45)un 19
N(cid:82)(cid:89) 19
(cid:45)an 20
1 (cid:49)ed(cid:69)an(cid:78) (cid:40)conomic (cid:56)nit (cid:73)orecasts at (cid:83)oint in time.
NEDBANK GROUP LIMITED – Annual Results 2019
▪ Se(cid:89)e(cid:85)e (cid:9) (cid:73)(cid:85)e(cid:84)uent (cid:83)(cid:82)(cid:90)e(cid:85) (cid:82)uta(cid:74)es (cid:76)n (cid:52)1 (cid:9) (cid:52)4 19.
1.1
▪ Unsusta(cid:76)na(cid:69)le SA (cid:73)(cid:76)s(cid:70)al (cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)n ((cid:71)e(cid:69)t t(cid:82) GDP
61%) (cid:9) (cid:76)n(cid:70)(cid:85)eas(cid:76)n(cid:74) (cid:83)(cid:85)(cid:82)(cid:69)a(cid:69)(cid:76)l(cid:76)t(cid:92) (cid:82)(cid:73) a M(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)s
s(cid:82)(cid:89)e(cid:85)e(cid:76)(cid:74)n (cid:70)(cid:85)e(cid:71)(cid:76)t (cid:85)at(cid:76)n(cid:74)s (cid:71)(cid:82)(cid:90)n(cid:74)(cid:85)a(cid:71)e.
▪ On(cid:74)(cid:82)(cid:76)n(cid:74) (cid:83)(cid:82)l(cid:76)(cid:70)(cid:92) un(cid:70)e(cid:85)ta(cid:76)nt(cid:92) (E(cid:58)(cid:38)(cid:15) SARB(cid:15) N(cid:43)I(cid:15)
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▪ Ga(cid:83) (cid:69)et(cid:90)een (cid:83)(cid:82)l(cid:76)(cid:70)(cid:92) (cid:83)(cid:85)(cid:82)n(cid:82)un(cid:70)ements (cid:9)
un(cid:71)e(cid:85)l(cid:92)(cid:76)n(cid:74) le(cid:74)(cid:76)slat(cid:76)(cid:89)e ena(cid:69)lement.
▪
Im(cid:83)a(cid:70)t (cid:82)(cid:73) (cid:70)l(cid:76)mate (cid:70)(cid:75)an(cid:74)e (cid:9) se(cid:89)e(cid:85)e (cid:71)(cid:85)(cid:82)u(cid:74)(cid:75)ts (cid:76)n
(cid:83)a(cid:85)ts (cid:82)(cid:73) t(cid:75)e (cid:70)(cid:82)unt(cid:85)(cid:92).
(cid:24)
NOTES:
Corporate (cid:9) business clients – mute(cid:71) (cid:76)n(cid:89)estment a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92) (cid:9) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)ta(cid:69)(cid:76)l(cid:76)t(cid:92)
un(cid:71)e(cid:85) (cid:83)(cid:85)essu(cid:85)e
(cid:37)usiness confidence around (cid:26)(cid:16)(cid:92)ear lo(cid:90)s1
(cid:46)e(cid:92) drivers in (cid:21)01(cid:28)
▪ (cid:38)(cid:82)m(cid:83)an(cid:92) ea(cid:85)n(cid:76)n(cid:74)s (cid:9) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)ts un(cid:71)e(cid:85) (cid:83)(cid:85)essu(cid:85)e.
▪
T(cid:82)tal (cid:73)(cid:76)(cid:91)e(cid:71)(cid:16)(cid:76)n(cid:89)estment a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92) stalle(cid:71)
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se(cid:70)t(cid:82)(cid:85) (cid:16)5.7% (cid:9) SOEs (cid:16)3.4%).
(cid:3013) Un(cid:85)el(cid:76)a(cid:69)le (cid:9) e(cid:91)(cid:83)ens(cid:76)(cid:89)e ele(cid:70)t(cid:85)(cid:76)(cid:70)(cid:76)t(cid:92) su(cid:83)(cid:83)l(cid:92).
(cid:3013) P(cid:82)l(cid:76)(cid:70)(cid:92) un(cid:70)e(cid:85)ta(cid:76)nt(cid:92).
(cid:3013) (cid:43)(cid:76)(cid:74)(cid:75) (cid:70)(cid:82)m(cid:83)l(cid:76)an(cid:70)e (cid:70)(cid:82)sts (cid:9) (cid:85)e(cid:71) ta(cid:83)e.
26
(cid:3013) Ele(cid:89)ate(cid:71) (cid:70)(cid:82)st st(cid:85)u(cid:70)tu(cid:85)es (la(cid:69)(cid:82)u(cid:85)(cid:15)
(cid:76)n(cid:73)(cid:85)ast(cid:85)u(cid:70)tu(cid:85)e).
▪ (cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)ate (cid:71)e(cid:69)t le(cid:89)els (cid:85)ema(cid:76)n (cid:85)elat(cid:76)(cid:89)el(cid:92) l(cid:82)(cid:90) (cid:69)(cid:92)
eme(cid:85)(cid:74)(cid:76)n(cid:74)(cid:16)ma(cid:85)(cid:78)et stan(cid:71)a(cid:85)(cid:71)s – SA (cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)ate
(cid:71)e(cid:69)t t(cid:82) GDP(cid:29) 74% (EM (cid:83)ee(cid:85) (cid:74)(cid:85)(cid:82)u(cid:83) (cid:85)an(cid:74)e).
▪
Ins(cid:82)l(cid:89)en(cid:70)(cid:76)es (cid:85)(cid:82)se 23% (cid:92)(cid:82)(cid:92).
(cid:25)
100
75
50
25
0
94
99
04
09
14
19
Bus(cid:76)ness (cid:70)(cid:82)n(cid:73)(cid:76)(cid:71)en(cid:70)e (cid:76)n(cid:71)e(cid:91)
1 (cid:37)ureau o(cid:73) (cid:40)conomic (cid:53)esearc(cid:75)(cid:15) (cid:53)(cid:48)(cid:37)
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
4
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Retail clients – (cid:71)(cid:76)s(cid:83)(cid:82)sa(cid:69)le (cid:76)n(cid:70)(cid:82)me (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) sl(cid:82)(cid:90)e(cid:71)
(cid:51)ersonal disposable income gro(cid:90)t(cid:75) slo(cid:90)ing1 (%)
(cid:46)e(cid:92) drivers in (cid:21)01(cid:28)
15
10
5
0
(cid:16)5
(cid:16)10
04
06
08
10
12
14
16
18
Pe(cid:85)s(cid:82)nal (cid:71)(cid:76)s(cid:83)(cid:82)sa(cid:69)le (cid:76)n(cid:70)(cid:82)me ((cid:92)(cid:82)(cid:92) (cid:70)(cid:75)an(cid:74)e)
1 (cid:49)ed(cid:69)an(cid:78) (cid:40)conomic (cid:56)nit | 2 (cid:37)ureau o(cid:73) (cid:40)conomic (cid:53)esearc(cid:75)(cid:15) (cid:41)(cid:49)(cid:37).
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
▪ Sl(cid:82)(cid:90)(cid:71)(cid:82)(cid:90)n (cid:76)n n(cid:82)m(cid:76)nal (cid:90)a(cid:74)e (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) ((cid:14)5.2%(cid:15)
t(cid:75)e l(cid:82)(cid:90)est (cid:83)a(cid:70)e s(cid:76)n(cid:70)e 2000).
▪ (cid:43)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:71)(cid:76)(cid:85)e(cid:70)t (cid:9) (cid:76)n(cid:71)(cid:76)(cid:85)e(cid:70)t ta(cid:91)es.
▪ Slu(cid:74)(cid:74)(cid:76)s(cid:75) (cid:70)(cid:82)nsume(cid:85) s(cid:83)en(cid:71)(cid:76)n(cid:74) ((cid:14)1.1% (cid:92)(cid:82)(cid:92))
(cid:85)esult(cid:76)n(cid:74) (cid:76)n mute(cid:71) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92).
▪ Unem(cid:83)l(cid:82)(cid:92)ment le(cid:89)els at 29.1% ((cid:75)(cid:76)(cid:74)(cid:75)est s(cid:76)n(cid:70)e
2008).
▪ Ele(cid:89)ate(cid:71) (cid:75)(cid:82)use(cid:75)(cid:82)l(cid:71) (cid:71)e(cid:69)t (cid:69)u(cid:85)(cid:71)ens
(De(cid:69)t % t(cid:82) PDI(cid:29) 72.6% (cid:3013) sta(cid:69)le)
▪ (cid:38)(cid:82)nsume(cid:85) (cid:70)(cid:82)n(cid:73)(cid:76)(cid:71)en(cid:70)e (cid:76)n(cid:71)e(cid:91)2 at (cid:16)7
(l(cid:82)(cid:90)est le(cid:89)el s(cid:76)n(cid:70)e (cid:52)4 2017).
▪
L(cid:82)(cid:90)e(cid:85) (cid:76)nte(cid:85)est (cid:85)ates (cid:69)ene(cid:73)(cid:76)(cid:70)(cid:76)al t(cid:82) (cid:76)n(cid:71)e(cid:69)te(cid:71)
(cid:70)(cid:82)nsume(cid:85)s(cid:15) (cid:69)ut t(cid:82)(cid:82) small t(cid:82) ma(cid:78)e an(cid:92) mate(cid:85)(cid:76)al
(cid:71)(cid:76)(cid:73)(cid:73)e(cid:85)en(cid:70)e t(cid:82) e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75).
(cid:26)
Spine of t(cid:75)e Nedbank strateg(cid:92)
Create great client e(cid:91)periences (cid:9) gro(cid:90) market s(cid:75)are in ke(cid:92)
value(cid:16)creating areas
Ena(cid:69)le(cid:71) (cid:69)(cid:92)
Tec(cid:75)nolog(cid:92)
(cid:14)
(cid:51)eople
(cid:9) brand
(cid:71)el(cid:76)(cid:89)e(cid:85)e(cid:71) t(cid:75)(cid:85)(cid:82)u(cid:74)(cid:75) process(cid:18)
operational e(cid:91)cellence
Target operating model
(TOM 1.0 (cid:9) TOM 2.0)
lea(cid:71)(cid:76)n(cid:74) t(cid:82)
Client gro(cid:90)t(cid:75) (cid:9) client satisfaction
(cid:50)perating efficiencies
(cid:85)esult(cid:76)n(cid:74) (cid:76)n
Revenue gro(cid:90)t(cid:75)
Cost savings
Financial targets
(me(cid:71)(cid:76)um (cid:9) l(cid:82)n(cid:74)te(cid:85)m)
▪ T(cid:50)(cid:48) 1(cid:17)0 – ne(cid:90) (cid:58)a(cid:92)s (cid:82)(cid:73) (cid:58)(cid:82)(cid:85)(cid:78)
(cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74) (cid:73)(cid:85)(cid:82)nt(cid:15) m(cid:76)(cid:71)(cid:71)le (cid:9) (cid:69)a(cid:70)(cid:78)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)e
(cid:82)(cid:83)t(cid:76)m(cid:76)sat(cid:76)(cid:82)n (cid:9) (cid:71)(cid:76)(cid:74)(cid:76)tal (a(cid:74)(cid:76)le) (cid:71)el(cid:76)(cid:89)e(cid:85)(cid:92).
Bene(cid:73)(cid:76)ts (cid:71)el(cid:76)(cid:89)e(cid:85)(cid:92) a(cid:75)ea(cid:71) (cid:82)(cid:73) ta(cid:85)(cid:74)ets (u(cid:83)
t(cid:82) 2020)
▪ T(cid:50)(cid:48) (cid:21)(cid:17)0 – In t(cid:75)e (cid:70)(cid:82)nte(cid:91)t (cid:82)(cid:73) an
(cid:76)n(cid:70)(cid:85)eas(cid:76)n(cid:74)l(cid:92) (cid:71)(cid:76)(cid:74)(cid:76)tal (cid:90)(cid:82)(cid:85)l(cid:71)(cid:15) (cid:70)u(cid:85)(cid:85)entl(cid:92)
st(cid:85)ate(cid:74)(cid:76)s(cid:76)n(cid:74) a(cid:85)(cid:82)un(cid:71) t(cid:75)e s(cid:75)a(cid:83)e (cid:82)(cid:73) (cid:82)u(cid:85)
(cid:69)(cid:85)an(cid:70)(cid:75) (cid:76)n(cid:73)(cid:85)ast(cid:85)u(cid:70)tu(cid:85)e(cid:15) a s(cid:75)(cid:76)(cid:73)t (cid:76)n (cid:82)u(cid:85)
RBB st(cid:85)u(cid:70)tu(cid:85)e t(cid:82) (cid:69)e m(cid:82)(cid:85)e (cid:70)l(cid:76)ent(cid:16)
(cid:70)ente(cid:85)e(cid:71)(cid:15) as (cid:90)ell as s(cid:75)a(cid:85)e(cid:71) se(cid:85)(cid:89)(cid:76)(cid:70)es
(cid:82)(cid:83)t(cid:76)m(cid:76)sat(cid:76)(cid:82)n a(cid:70)(cid:85)(cid:82)ss t(cid:75)e (cid:74)(cid:85)(cid:82)u(cid:83) (ta(cid:85)(cid:74)ets
(cid:90)(cid:76)ll (cid:69)e (cid:70)(cid:82)mmun(cid:76)(cid:70)ate(cid:71) ea(cid:85)l(cid:92) 2021).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:27)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 5
(cid:48)anaged Evolution strateg(cid:92) is enabling core banking s(cid:92)stem
rationalisation(cid:15) standardisation (cid:9) simplification
(cid:48)anaged Evolution approac(cid:75)
Core s(cid:92)stems1 ((cid:6))
(cid:21)0(cid:21)0 outcomes
(cid:181)B(cid:76)(cid:74) (cid:69)an(cid:74)(cid:182)
R(cid:82)(cid:69)ust(cid:15)
(cid:73)le(cid:91)(cid:76)(cid:69)le IT
lan(cid:71)s(cid:70)a(cid:83)e
t
n
e
m
e
c
n
a
v
d
a
T
I
(cid:48)anaged
Evolution
Rat(cid:76)(cid:82)nal(cid:76)se(cid:15) stan(cid:71)a(cid:85)(cid:71)(cid:76)se (cid:9) s(cid:76)m(cid:83)l(cid:76)(cid:73)(cid:92)
Digitise
Delig(cid:75)t
Disrupt
▪ 24(cid:18)7(cid:15) (cid:85)eal(cid:16)t(cid:76)me s(cid:92)stems
▪ A(cid:74)(cid:76)le(cid:15) (cid:73)le(cid:91)(cid:76)(cid:69)le mult(cid:76)la(cid:92)e(cid:85)e(cid:71)
a(cid:85)(cid:70)(cid:75)(cid:76)te(cid:70)tu(cid:85)e
▪ D(cid:76)(cid:74)(cid:76)tall(cid:92) (cid:73)(cid:76)t (cid:9) anal(cid:92)t(cid:76)(cid:70)all(cid:92)
st(cid:85)(cid:82)n(cid:74) (cid:82)(cid:85)(cid:74)an(cid:76)sat(cid:76)(cid:82)n
O(cid:83)(cid:83)(cid:82)(cid:85)tun(cid:76)st(cid:76)(cid:70)
((cid:181)Pat(cid:70)(cid:75)(cid:76)n(cid:74)(cid:182))
0
5
2
1
7
1
2
5
1
2
4
1
8
2
1
9
1
1
7
1
1
5
8
▪ Plat(cid:73)(cid:82)(cid:85)ms t(cid:75)at a(cid:85)e (cid:76)nn(cid:82)(cid:89)at(cid:76)(cid:89)e
(cid:9) (cid:85)es(cid:83)(cid:82)ns(cid:76)(cid:89)e t(cid:82) (cid:70)(cid:75)an(cid:74)e
5
7
(cid:16)
5
6
(cid:21)010
(cid:37)usiness value
(cid:21)0(cid:21)0
10
14 15 16 17 18 19 20 LT
ta(cid:85)(cid:74)ets
▪ Omn(cid:76)(cid:70)(cid:75)annel (cid:70)l(cid:76)ent
(cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74) (cid:9) se(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)n(cid:74)
1 (cid:43)istorical num(cid:69)ers (cid:75)a(cid:89)e (cid:69)een ad(cid:77)usted to ali(cid:74)n (cid:90)it(cid:75) t(cid:75)e current de(cid:73)inition o(cid:73) core to (cid:69)an(cid:78)in(cid:74) systems. (cid:55)(cid:75)e (cid:83)re(cid:89)iously stated tar(cid:74)et o(cid:73) (cid:25)(cid:19) (cid:69)y t(cid:75)e end o(cid:73) 2(cid:19)2(cid:19) (cid:75)as (cid:69)een re(cid:89)ised u(cid:83)(cid:90)ard due to
our strate(cid:74)y to modernise(cid:15) rat(cid:75)er t(cid:75)an rationalise(cid:15) some systems (cid:9) includes ne(cid:90) systems suc(cid:75) as (cid:41)le(cid:91)cu(cid:69)e in our (cid:36)(cid:73)rica (cid:53)e(cid:74)ions cluster.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)
NOTES:
T(cid:75)e (cid:48)anaged Evolution programme (cid:97)(cid:26)0(cid:8) complete1 (cid:9) forecast to be
materiall(cid:92) complete b(cid:92) end of (cid:21)0(cid:21)0
Completed to date (R(cid:69)n s(cid:83)en(cid:71))
IT investment profile
(cid:21)0(cid:21)0 outcomes
ER(cid:51) – (cid:76)m(cid:83)lemente(cid:71) SAP
Foundations – (cid:38)l(cid:76)ent 360(cid:15) SOA(cid:15) E(cid:38)M(cid:15)
BPM(cid:15) A(cid:74)(cid:76)le(cid:15) (cid:38)(cid:92)(cid:69)e(cid:85)se(cid:70)u(cid:85)(cid:76)t(cid:92)
Data – I(cid:41)RS 9(cid:15) POPI(cid:15) ED(cid:58) (Data la(cid:78)e)(cid:15)
RDARR
Strategic pa(cid:92)ments – m(cid:82)(cid:71)e(cid:85)n(cid:76)se(cid:71)
(cid:83)a(cid:92)ment en(cid:74)(cid:76)ne(cid:15) (cid:69)as(cid:76)(cid:70) (cid:57)AS (e(cid:74)
ele(cid:70)t(cid:85)(cid:76)(cid:70)(cid:76)t(cid:92))(cid:15) aut(cid:75)ent(cid:76)(cid:70)ate(cid:71) (cid:70)(cid:82)lle(cid:70)t(cid:76)(cid:82)ns
Client s(cid:92)stems – 114 se(cid:85)(cid:89)(cid:76)(cid:70)es (cid:71)(cid:76)(cid:74)(cid:76)t(cid:76)se(cid:71)
((cid:73)(cid:85)(cid:82)m 51 (cid:76)n (cid:181)18)(cid:15) (cid:69)(cid:85)an(cid:70)(cid:75)(cid:16)(cid:82)(cid:73)(cid:16)(cid:73)utu(cid:85)e
te(cid:70)(cid:75)n(cid:82)l(cid:82)(cid:74)(cid:92)(cid:15) E(cid:70)l(cid:76)(cid:83)se – (cid:71)(cid:76)(cid:74)(cid:76)tal
(cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74)(cid:15) PL (cid:9) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal sales(cid:15)
(cid:70)all (cid:70)ent(cid:85)e m(cid:82)(cid:71)e(cid:85)n(cid:76)sat(cid:76)(cid:82)n(cid:15) (cid:38)RM(cid:15) D(cid:59)M
(s(cid:76)n(cid:74)le (cid:73)(cid:85)(cid:82)nten(cid:71))(cid:15) AML(cid:15) L(cid:82)(cid:92)alt(cid:92) (cid:9)
(cid:85)e(cid:90)a(cid:85)(cid:71)s(cid:15) (cid:76)nsu(cid:85)an(cid:70)e (cid:83)lat(cid:73)(cid:82)(cid:85)m
Core banking modernisation –
(cid:41)le(cid:91)(cid:70)u(cid:69)e (NAR su(cid:69)s(cid:76)(cid:71)(cid:76)a(cid:85)(cid:76)es)(cid:15) L(cid:82)an I(cid:52)(cid:15)
(cid:41)(cid:85)(cid:82)nt A(cid:85)ena
Ne(cid:90) tec(cid:75)nologies – (cid:70)l(cid:76)ent (cid:70)ent(cid:85)(cid:76)(cid:70)
s(cid:82)lut(cid:76)(cid:82)ns (cid:69)u(cid:76)lt (cid:82)n ta(cid:85)(cid:74)et state s(cid:92)stems
R0.6(cid:69)n
R1.4(cid:69)n
R0.8(cid:69)n
R0.6(cid:69)n
R3.5(cid:69)n
R1.4(cid:69)n
R1(cid:17)3bn
R(cid:28)(cid:17)(cid:25)bn
(cid:38)(cid:82)(cid:85)e (cid:69)an(cid:78)(cid:76)n(cid:74)
m(cid:82)(cid:71)e(cid:85)n(cid:76)sat(cid:76)(cid:82)n
St(cid:85)ate(cid:74)(cid:76)(cid:70)
(cid:83)a(cid:92)ments
(cid:38)l(cid:76)ent
s(cid:92)stems
Ente(cid:85)(cid:83)(cid:85)(cid:76)se
(cid:71)ata
(cid:41)(cid:82)un(cid:71)at(cid:76)(cid:82)ns
Foundations – m(cid:82)stl(cid:92) (cid:70)(cid:82)m(cid:83)lete(cid:15)
(cid:82)n(cid:74)(cid:82)(cid:76)n(cid:74) (cid:76)n(cid:89)estment (cid:76)n (cid:70)(cid:92)(cid:69)e(cid:85)se(cid:70)u(cid:85)(cid:76)t(cid:92)
Data – A(cid:71)(cid:89)an(cid:70)e ma(cid:70)(cid:75)(cid:76)ne lea(cid:85)n(cid:76)n(cid:74)(cid:15) RPA(cid:15)
a(cid:85)t(cid:76)(cid:73)(cid:76)(cid:70)(cid:76)al (cid:76)ntell(cid:76)(cid:74)en(cid:70)e(cid:15) s(cid:76)n(cid:74)le (cid:71)ata st(cid:82)(cid:85)e
Client s(cid:92)stems – (cid:33)180 se(cid:85)(cid:89)(cid:76)(cid:70)es
(cid:71)(cid:76)(cid:74)(cid:76)t(cid:76)se(cid:71)(cid:15) (cid:71)(cid:76)(cid:74)(cid:76)tal (cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74) (cid:9) se(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)n(cid:74)
– (cid:77)u(cid:85)(cid:76)st(cid:76)(cid:70) (cid:14) (cid:90)e(cid:69) (cid:9) a(cid:83)(cid:83)(cid:15) a (cid:73)u(cid:85)t(cid:75)e(cid:85) 5
(cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)ts (cid:82)(cid:73)(cid:73)e(cid:85)e(cid:71) (cid:71)(cid:76)(cid:74)(cid:76)tall(cid:92)(cid:15) (cid:41)AT(cid:38)A(cid:18) (cid:41)I(cid:38)AA
Ne(cid:90) tec(cid:75)nologies – (cid:83)lat(cid:73)(cid:82)(cid:85)ms (cid:9)
e(cid:70)(cid:82)s(cid:92)stems
(cid:21)0(cid:21)0(cid:14) outcomes
(cid:37)u(cid:69)(cid:69)le si(cid:93)e indicates
total estimated s(cid:83)end
ERP
Strategic pa(cid:92)ments – (cid:73)ull(cid:16)se(cid:85)(cid:89)(cid:76)(cid:70)e (cid:75)u(cid:69)
((cid:76)n(cid:70)l (cid:57)AS(cid:15) (cid:41)(cid:59))
n
o
i
t
u
c
e
(cid:91)
e
f
o
r
e
d
r
o
(cid:9)
e
c
n
e
u
(cid:84)
e
s
g
n
i
t
r
a
t
S
0%
20%
40%
60%
80%
100%
(cid:8) completion
Core banking modernisation –
m(cid:82)(cid:71)e(cid:85)n(cid:76)sat(cid:76)(cid:82)n (cid:82)(cid:73) len(cid:71)(cid:76)n(cid:74) (cid:9) (cid:71)e(cid:83)(cid:82)s(cid:76)t
s(cid:92)stems(cid:15) (cid:71)e(cid:70)(cid:82)mm(cid:76)ss(cid:76)(cid:82)n le(cid:74)a(cid:70)(cid:92)
m(cid:76)(cid:71)(cid:71)le(cid:90)a(cid:85)e
NEDBANK GROUP LIMITED – Annual Results 2019
1 (cid:36)s re(cid:83)orted(cid:15) (cid:48)(cid:40) (cid:83)ro(cid:74)ramme (cid:90)as (cid:97)(cid:25)(cid:19)(cid:8) com(cid:83)lete at (cid:39)ecem(cid:69)er 2(cid:19)1(cid:27). (cid:48)aterially com(cid:83)lete (cid:69)y 2(cid:19)2(cid:19) is (cid:97)(cid:27)(cid:19)(cid:8)(cid:15) includin(cid:74) (cid:41)oundations at (cid:97)(cid:28)(cid:22)(cid:8)
10
NOTES:
6
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Good progress on our digital strateg(cid:92)
BOOKLET SLIDE
To be (cid:36)frica(cid:10)s (cid:6)1 digital financial services pla(cid:92)er
(cid:47)ong(cid:16)term
aspirations
75% digital
sales1
70% digitall(cid:92) active
clients(cid:21)
60
N(cid:51)S3
(cid:31) 50% Cost(cid:16)to(cid:16)
income ratio
De(cid:70) 2019(cid:29) 30(cid:8)
75%
70%
Ne(cid:71)(cid:69)an(cid:78) (cid:71)(cid:76)(cid:74)(cid:76)tal
NPS (cid:33) 60%
60%
21%
9%
3%
24%
20%
12%
37% 38%
26%
58.6% 57.2% 56.6%
(cid:31) 50%
17
18
19
As(cid:83)(cid:76)(cid:85)at(cid:76)(cid:82)n
17
18
19
As(cid:83)(cid:76)(cid:85)at(cid:76)(cid:82)n
17
18
19
As(cid:83)(cid:76)(cid:85)at(cid:76)(cid:82)n
17
18
19
MLT ta(cid:85)(cid:74)et
17 18 19 LT ta(cid:85)(cid:74)et
17 18 19 LT ta(cid:85)(cid:74)et
17 18 19 LT ta(cid:85)(cid:74)et
17 18 19 LT ta(cid:85)(cid:74)et
1 (cid:54)ales across di(cid:74)ital c(cid:75)annels as (cid:83)ercenta(cid:74)e o(cid:73) total sales. | 2 (cid:39)i(cid:74)itally acti(cid:89)e clients are t(cid:75)ose t(cid:75)at (cid:75)a(cid:89)e acti(cid:89)ely used a di(cid:74)ital c(cid:75)annel o(cid:89)er a (cid:28)(cid:19)(cid:16)day (cid:83)eriod as (cid:83)ercenta(cid:74)e o(cid:73)
total clients. | (cid:22) (cid:49)(cid:51)(cid:54) re(cid:73)ers to consumer (cid:49)(cid:51)(cid:54) (cid:11)not only di(cid:74)ital c(cid:75)annels(cid:12).
NEDBANK GROUP LIMITED – Annual Results 2019
11
NOTES:
Eclipse – s(cid:76)m(cid:83)l(cid:76)(cid:73)(cid:76)e(cid:71) en(cid:71)(cid:16)t(cid:82)(cid:16)en(cid:71) (cid:71)(cid:76)(cid:74)(cid:76)tal (cid:70)l(cid:76)ent (cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74) (cid:73)(cid:82)(cid:85) (cid:76)n(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)uals (cid:76)n 2019
End(cid:16)to(cid:16)end digital client onboarding(cid:15) digitising our top 10 products (cid:9) more t(cid:75)an 1(cid:27)0 services b(cid:92) end(cid:16)(cid:21)0(cid:21)0
(cid:43)1 2019
Clients(cid:29)
In(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)ual (cid:70)l(cid:76)ent (cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74)
a
C(cid:75)annels(cid:29)
In (cid:69)(cid:85)an(cid:70)(cid:75)
(cid:58)e(cid:69) (cid:9) a(cid:83)(cid:83)
a
(cid:43)2 2019
a
(cid:45)u(cid:85)(cid:76)st(cid:76)(cid:70) (cid:70)l(cid:76)ent
(cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74)
(cid:43)1 2020
(cid:43)2 2020
(cid:43)2 2021
(cid:45)u(cid:85)(cid:76)st(cid:76)(cid:70) (cid:70)l(cid:76)ent
(cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74)
(cid:51)roducts1(cid:29)
▪ Pe(cid:85)s(cid:82)nal l(cid:82)ans
▪ T(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)ts
a
▪ (cid:38)a(cid:85)(cid:71) (cid:76)ssu(cid:76)n(cid:74) (1)
▪ In(cid:89)estments (1)
▪ O(cid:89)e(cid:85)(cid:71)(cid:85)a(cid:73)ts (1)
a
▪ (cid:38)a(cid:85)(cid:71) (cid:76)ssu(cid:76)n(cid:74) (2)
▪ In(cid:89)estments (2)
▪ O(cid:89)e(cid:85)(cid:71)(cid:85)a(cid:73)ts (2)
In(cid:89)estments include unit trusts (cid:9)
retirement annuities (cid:11)additional (cid:69)ene(cid:73)it(cid:12)
▪ (cid:43)(cid:82)me l(cid:82)ans
(2) (cid:13)
▪ (cid:43)(cid:82)me l(cid:82)ans (1) (cid:13)
▪ (cid:57)e(cid:75)(cid:76)(cid:70)le (cid:41)(cid:76)nan(cid:70)e (cid:13)
▪ St(cid:82)(cid:70)(cid:78)(cid:69)(cid:85)(cid:82)(cid:78)(cid:76)n(cid:74) (cid:13)
▪ (cid:41)(cid:82)(cid:85)e(cid:91) (cid:13)
▪ Stu(cid:71)ent L(cid:82)ans (cid:13)
Services(cid:29)
86
114
(cid:33) 180
NEDBANK GROUP LIMITED – Annual Results 2019
1 (cid:55)(cid:75)e num(cid:69)er (cid:11)1(cid:12) re(cid:73)ers to (cid:73)irst minimal (cid:89)ia(cid:69)le (cid:83)roduct launc(cid:75) on t(cid:75)e ne(cid:90) (cid:83)lat(cid:73)orm(cid:30) (cid:11)2(cid:12) re(cid:73)ers to additional en(cid:75)ancements.
(cid:13) (cid:39)eli(cid:89)ery timelines remain under re(cid:89)ie(cid:90) (cid:74)i(cid:89)en de(cid:83)endencies on ot(cid:75)er core (cid:48)ana(cid:74)ed (cid:40)(cid:89)olution (cid:83)ro(cid:74)rammes.
1(cid:21)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 7
Eclipse (cid:9) app – (cid:76)m(cid:83)(cid:85)(cid:82)(cid:89)e(cid:71) (cid:70)l(cid:76)ent e(cid:91)(cid:83)e(cid:85)(cid:76)en(cid:70)es (cid:9) unl(cid:82)(cid:70)(cid:78)(cid:76)n(cid:74) e(cid:73)(cid:73)(cid:76)(cid:70)(cid:76)en(cid:70)(cid:76)es
Time to open a personal loan (cid:9) transactional
product (m(cid:76)nutes(cid:15) ma(cid:77)(cid:82)(cid:85)(cid:76)t(cid:92) (cid:82)(cid:73) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)ns)
Sales t(cid:75)roug(cid:75) Eclipse (cid:9) app
(% (cid:82)(cid:73) t(cid:82)tal)
Pa(cid:83)e(cid:85) (cid:89)(cid:82)lumes (cid:76)n
(cid:69)a(cid:70)(cid:78)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)es (cid:71)(cid:82)(cid:90)n
50–60%
45(cid:16)50
32
S(cid:78)(cid:76)lle(cid:71) sta(cid:73)(cid:73) (cid:70)an
(cid:71)(cid:82) (cid:76)n (cid:31) 10 m(cid:76)ns
E(cid:91)(cid:76)st(cid:76)n(cid:74) (cid:70)l(cid:76)ents
3 t(cid:82) 7 m(cid:76)ns
(cid:148) 20
(cid:148) 20
(cid:148) 10
(cid:148) 10
2018
(cid:52)4 19
((cid:69)(cid:85)an(cid:70)(cid:75))
(cid:52)4 19
((cid:90)e(cid:69) (cid:9) a(cid:83)(cid:83))
0% 0%
2018
79%
3%
75%
14%
61%
2%
76%
59% 61%
50%
9%
38%
1%
37% 41%
16%
2%
14%
En(cid:71) (cid:52)2 19
((cid:69)(cid:85)an(cid:70)(cid:75))
(cid:52)3 19
(cid:52)4 19
Pe(cid:85)s(cid:82)nal l(cid:82)an
T(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)t
A(cid:83)(cid:83)(cid:16)(cid:85)elate(cid:71) sales
All (cid:70)(cid:75)annels
NEDBANK GROUP LIMITED – Annual Results 2019
13
NOTES:
NOTES:
In addition(cid:15) our various ne(cid:90) innovations (cid:9) digital
en(cid:75)ancements delivered improved client e(cid:91)periences
BOOKLET SLIDE
i(cid:50)S (cid:9) (cid:36)ndroid app store client ratings1
(sta(cid:85)s (cid:18) 5)
Net promoter score(cid:21)
(%)
Onl(cid:92) SA (cid:69)an(cid:78) t(cid:82)
(cid:76)n(cid:70)(cid:85)ease NPS
(cid:76)n 2019
6
2
.
3
3
.
7
3
.
7
3
.
4
4
.
6
4
.
6
4
.
Ban(cid:78) A Ban(cid:78) B Ban(cid:78) (cid:38) Ban(cid:78) D Ne(cid:71)(cid:69)an(cid:78)
M(cid:82)ne(cid:92)
Ne(cid:71)(cid:69)an(cid:78)
(cid:58)ealt(cid:75)
Ban(cid:78) E
6
2
17
7
3
18
8
3
19
Ne(cid:71)(cid:69)an(cid:78)
(cid:31)
0
6
4
3
(cid:31)
5
5
D(cid:76)(cid:74)(cid:76)tal
A(cid:89)e(cid:85)a(cid:74)e SA
(cid:69)an(cid:78)s
Lea(cid:71)(cid:76)n(cid:74)
Inte(cid:85)nat(cid:76)(cid:82)nal
(cid:69)an(cid:78)s
1 (cid:36)s at (cid:39)ec 2(cid:19)1(cid:28) (cid:11)sim(cid:83)le a(cid:89)era(cid:74)e o(cid:73) i(cid:50)(cid:54) (cid:9) (cid:36)ndroid a(cid:83)(cid:83) ratin(cid:74)s(cid:12). | 2 (cid:54)ource(cid:29) Consulta (cid:11)(cid:54)(cid:36)(cid:16)csi(cid:12)(cid:15) researc(cid:75) o(cid:73) (cid:89)arious international (cid:69)an(cid:78)s t(cid:75)at are leadin(cid:74) in t(cid:75)eir di(cid:74)ital (cid:77)ourneys
includin(cid:74) (cid:54)(cid:69)er(cid:69)an(cid:78)(cid:15) C(cid:37)(cid:36)(cid:15) (cid:42)aranti(cid:15) (cid:39)(cid:37)(cid:54)(cid:15) (cid:48)oneta.
NEDBANK GROUP LIMITED – Annual Results 2019
1(cid:23)
8
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
(cid:57)alue to s(cid:75)are(cid:75)olders
N(cid:36)(cid:57) per s(cid:75)are ((cid:70)ents)
R(cid:50)E (cid:9) cost of e(cid:84)uit(cid:92) (%)
Dividend per s(cid:75)are ((cid:70)ents)
(cid:41)lat
(cid:14)4%
17.0
16.5
16.4
17.9
E(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70)
(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t
16.0
14.2
14.0
14.1
14.1
13.0
5
8
6
5
1
15
0
3
8
5
1
16
0
9
9
6
1
17
0
6
5
7
1
18
4
0
2
8
1
19
15
16
17
18
19
7
0
1
1
15
0
0
2
1
16
5
8
2
1
17
5
1
4
1
18
5
1
4
1
19
(cid:38)AGR(cid:29) (cid:14)4%
(cid:38)OE
ROE (e(cid:91)(cid:70)l G(cid:58))
(cid:38)AGR(cid:29) (cid:14)6%
NEDBANK GROUP LIMITED – Annual Results 2019
1(cid:24)
NOTES:
NOTES:
(cid:50)ur role in societ(cid:92)
ST(cid:36)FF
▪ Pa(cid:76)(cid:71) R1(cid:26)(cid:17)3bn in salaries (cid:9) benefits(cid:17)
▪ Staff engagement score strong at (cid:26)(cid:24)(cid:8) –
(cid:90)ell a(cid:69)(cid:82)(cid:89)e (cid:76)n(cid:71)ust(cid:85)(cid:92) le(cid:89)els.
▪ A(cid:70)(cid:70)ele(cid:85)ate(cid:71) leaders(cid:75)ip (cid:9) culture
c(cid:75)ange programmes(cid:17)
▪ Transforming our (cid:90)orkforce t(cid:82)(cid:90)a(cid:85)(cid:71)s SA
(cid:71)em(cid:82)(cid:74)(cid:85)a(cid:83)(cid:75)(cid:76)(cid:70)s (79.5% (cid:69)la(cid:70)(cid:78) em(cid:83)l(cid:82)(cid:92)ees).
C(cid:47)IENTS
S(cid:43)(cid:36)RE(cid:43)(cid:50)(cid:47)DERS
▪ (cid:38)ele(cid:69)(cid:85)ate(cid:71) (cid:24)0 (cid:92)ears on t(cid:75)e (cid:45)SE in (cid:21)01(cid:28)(cid:17)
▪ Pa(cid:76)(cid:71) R(cid:26)(cid:17)1bn dividends t(cid:82) s(cid:75)a(cid:85)e(cid:75)(cid:82)l(cid:71)e(cid:85)s.
▪ Supportive outcomes at (cid:24)(cid:21)nd (cid:36)G(cid:48)(cid:17)
▪ En(cid:74)a(cid:74)(cid:76)n(cid:74) (cid:82)n ESG (cid:9) climate c(cid:75)ange
matters(cid:17)
(cid:50)ur purpose –
t(cid:82) use (cid:82)u(cid:85)
(cid:73)(cid:76)nan(cid:70)(cid:76)al
e(cid:91)(cid:83)e(cid:85)t(cid:76)se t(cid:82)
(cid:71)(cid:82) (cid:74)(cid:82)(cid:82)(cid:71)
▪ Ma(cid:76)nta(cid:76)ne(cid:71) a st(cid:85)(cid:82)n(cid:74) (cid:69)alan(cid:70)e s(cid:75)eet t(cid:82)
REG(cid:56)(cid:47)(cid:36)T(cid:50)RS
support a safe (cid:9) stable banking s(cid:92)stem(cid:17)
▪ Pa(cid:76)(cid:71) R11bn direct(cid:15) indirect (cid:9) ot(cid:75)er ta(cid:91)es(cid:17)
▪ R111bn invested in government (cid:9) public
sector (cid:69)(cid:82)n(cid:71)s.
S(cid:50)CIET(cid:60)
▪ R(cid:21)0(cid:27)bn ne(cid:90)(cid:16)loan pa(cid:92)outs(cid:15) u(cid:83) (cid:69)(cid:92) 15%.
▪ Sa(cid:73)e(cid:74)ua(cid:85)(cid:71)e(cid:71) R(cid:28)0(cid:23)bn deposits at (cid:70)(cid:82)m(cid:83)et(cid:76)t(cid:76)(cid:89)e
(cid:76)nte(cid:85)est (cid:85)ates.
▪ E(cid:91)citing innovations launc(cid:75)ed – E(cid:70)l(cid:76)(cid:83)se(cid:15) (cid:43)e(cid:92)Ne(cid:71)
((cid:71)(cid:76)(cid:74)(cid:76)tal (cid:70)(cid:82)n(cid:70)(cid:76)e(cid:85)(cid:74)e)(cid:15) L(cid:82)(cid:92)alt(cid:92) (cid:9) Re(cid:90)a(cid:85)(cid:71)s(cid:15) (cid:9) API
Ma(cid:85)(cid:78)et(cid:83)la(cid:70)e.
▪ (cid:41)(cid:76)(cid:85)st la(cid:85)(cid:74)e SA (cid:69)an(cid:78) t(cid:82) (cid:76)nt(cid:85)(cid:82)(cid:71)u(cid:70)e a (cid:93)ero(cid:16)mont(cid:75)l(cid:92)(cid:16)fee
account(cid:17)
▪ (cid:50)nl(cid:92) S(cid:36) bank to increase N(cid:51)S score(cid:17)
▪ P(cid:85)(cid:82)(cid:70)u(cid:85)e(cid:71) (cid:26)(cid:25)(cid:8) of our goods (cid:9) services locall(cid:92)(cid:17)
▪ R130m SED spend – m(cid:82)(cid:85)e t(cid:75)an 50% (cid:82)n e(cid:71)u(cid:70)at(cid:76)(cid:82)n.
▪ (cid:50)ngoing deliver(cid:92) on t(cid:75)e SDGs – (cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74) SA(cid:182)s (cid:73)(cid:76)(cid:85)st (cid:9)
(cid:82)nl(cid:92) (cid:70)(cid:82)mme(cid:85)(cid:70)(cid:76)al (cid:69)an(cid:78) t(cid:82) l(cid:76)st a (cid:74)(cid:85)een (cid:69)(cid:82)n(cid:71) (cid:82)n t(cid:75)e (cid:45)SE.
▪ (cid:60)ES initiative – (cid:70)(cid:85)eate(cid:71) 3 315 mean(cid:76)n(cid:74)(cid:73)ul (cid:77)(cid:82)(cid:69) (cid:82)(cid:83)(cid:83)(cid:82)(cid:85)tun(cid:76)t(cid:76)es
(cid:73)(cid:82)(cid:85) (cid:82)u(cid:85) (cid:92)(cid:82)ut(cid:75) (cid:76)n 2019.
▪ (cid:47)evel 1 (cid:37)(cid:37)(cid:37)EE (cid:70)(cid:82)nt(cid:85)(cid:76)(cid:69)ut(cid:82)(cid:85) (un(cid:71)e(cid:85) t(cid:75)e Amen(cid:71)e(cid:71) (cid:41)S(cid:38)).
NEDBANK GROUP LIMITED – Annual Results 2019
1(cid:25)
NEDBANK GROUP – ANNUAL RESULTS 2019 9
Being a responsible corporate citizen & focus on ESG
BOOKLET SLIDE
Delivering on our purpose
Dow Jones Sustainability Index – one of only
27 banks & included for 14th year
of using our financial expertise to do good
>50% of SED
spend on
education
First SA bank
to launch a
green bond
on the JSE
Launched 3
zero-monthly-
fee accounts
76%
procurement
spend - support
SA business
YES – placed
Committed
R25m
safeguarding
critical water
source areas
>3 300 previously
unemployed
youth
ESG
AA
rating
NEDBANK GROUP LIMITED – Annual Results 2019
Africa’s first carbon-neutral financial
organisation – carbon neutral since 2010
(& offset our water consumption)
WWF Nedbank Green Trust Partnership –
invested > R260m since inception in support of
over 200 environmental & social projects
Only SA company awarded overall winner at
all three major reporting awards – IAS (SA),
EY Integrated Reporting & JSE Chartered
Secretaries Integrated Reporting - awards
2nd
among all SA
companies
2nd
among global banks
(similar size)
Top 20
ESG among global
banks & services
companies
17
FINANCIAL OVERVIEW
Financial performance reflects impact of
higher impairments
Raisibe Morathi
CFO
NEDBANK GROUP LIMITED – Annual Results 2019
18
10
NOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 RESULTS
PRESENTATION
(cid:46)e(cid:92) performance indicators
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
E(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm)
ROE
ROE (e(cid:91)(cid:70)l (cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)ll)
D(cid:76)lute(cid:71) (cid:43)EPS ((cid:70)ents)
P(cid:85)e(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)s(cid:76)(cid:82)n(cid:76)n(cid:74) (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm)
Net (cid:76)nte(cid:85)est ma(cid:85)(cid:74)(cid:76)n
(cid:38)(cid:85)e(cid:71)(cid:76)t l(cid:82)ss (cid:85)at(cid:76)(cid:82)
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me (cid:85)at(cid:76)(cid:82)
(cid:38)ET1 (cid:85)at(cid:76)(cid:82)
(7%)
(51%)
(6%)
(cid:14)3%
(cid:21)01(cid:28)
1(cid:21) (cid:24)0(cid:25)
1 (cid:23)1(cid:21)
1(cid:24)(cid:17)0(cid:8)
1(cid:25)(cid:17)0(cid:8)
(cid:21) (cid:24)(cid:25)(cid:24)
2018
13 495
2 868
16.8%
17.9%
2 736
(cid:21)(cid:21) (cid:24)(cid:26)(cid:26)
21 990
3(cid:17)(cid:24)(cid:21)(cid:8)
0(cid:17)(cid:27)(cid:21)(cid:8)
(cid:24)(cid:25)(cid:17)(cid:24)(cid:8)
11(cid:17)(cid:24)(cid:8)
3.65%
0.53%
57.2%
11.7%
NEDBANK GROUP LIMITED – Annual Results 2019
1(cid:28)
(cid:43)eadline earnings do(cid:90)n b(cid:92) (cid:26)(cid:8) – (cid:76)m(cid:83)a(cid:70)t (cid:82)(cid:73) (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:76)m(cid:83)a(cid:76)(cid:85)ments
(cid:43)eadline earnings (Rm)
22
1 348
(2 441)
(547)
265
(296)
660
(cid:14)5%
(cid:14)0%
(cid:14)66%
(cid:14)2%
(cid:14)50%
13 495
2018
NII
NIR
Im(cid:83)a(cid:76)(cid:85)ments E(cid:91)(cid:83)enses
Ass(cid:82)(cid:70)(cid:76)ate
(cid:76)n(cid:70)(cid:82)me
(cid:61)(cid:76)m(cid:69)a(cid:69)(cid:90)e
net m(cid:82)neta(cid:85)(cid:92)
l(cid:82)ss
(1)
D(cid:76)(cid:85)e(cid:70)t ta(cid:91)
(cid:9) (cid:82)t(cid:75)e(cid:85)
12 506
2019
1 (cid:49)et monetary loss (cid:177) (cid:75)y(cid:83)erin(cid:73)lation accountin(cid:74) (cid:73)or o(cid:83)erations in (cid:61)im(cid:69)a(cid:69)(cid:90)e (cid:11)(cid:83)re(cid:16)minorities(cid:12).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)0
NOTES:
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019
11
(cid:52)ualit(cid:92) of earnings – (cid:76)llust(cid:85)at(cid:76)(cid:89)e (cid:76)m(cid:83)a(cid:70)t (cid:82)(cid:73) (cid:89)a(cid:85)(cid:76)(cid:82)us (cid:76)tems (cid:9) (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85)
(cid:76)m(cid:83)a(cid:76)(cid:85)ments
(cid:43)eadline earnings (Rm)
500
238
140
186
75
61
96
12 506
2019
Net PRMA
(cid:69)ene(cid:73)(cid:76)t
A(cid:73)(cid:85)(cid:76)(cid:70)a Re(cid:74)(cid:76)(cid:82)ns
(cid:82)n(cid:70)e(cid:16)(cid:82)(cid:73)(cid:73)s
(cid:60)ES
(cid:70)(cid:82)sts
(cid:61)(cid:76)m(cid:69)a(cid:69)(cid:90)e
(1)
Ban(cid:70)(cid:82)
(cid:210)n(cid:76)(cid:70)(cid:82)
(cid:82)(cid:83)t(cid:76)(cid:82)n
(2)
P(cid:85)(cid:76)(cid:89)ate
e(cid:84)u(cid:76)t(cid:92)
(cid:85)e(cid:89)aluat(cid:76)(cid:82)ns
(3)
(cid:38)IB
(cid:76)m(cid:83)a(cid:76)(cid:85)ments
(4)
13 653
2019
a(cid:73)te(cid:85)
(cid:76)tems
(cid:43)1 (cid:21)01(cid:28)
(cid:21)01(cid:28)
(cid:43)(cid:21) (cid:21)01(cid:28)
1 (cid:61)im(cid:69)a(cid:69)(cid:90)e (cid:75)y(cid:83)erin(cid:73)lation accountin(cid:74) (cid:11)(cid:83)ost minorities(cid:15) (cid:53)1(cid:23)2m(cid:12) (cid:9) le(cid:74)acy de(cid:69)t im(cid:83)airment (cid:11)(cid:53)(cid:23)(cid:23)m(cid:12). | 2 (cid:36)ccountin(cid:74) (cid:73)or (cid:37)anco (cid:210)nico o(cid:83)tion. | (cid:22) (cid:51)ri(cid:89)ate(cid:16)equity
re(cid:89)aluations o(cid:73) t(cid:90)o lar(cid:74)e CI(cid:37) counters. | (cid:23) CI(cid:37)(cid:182)s t(cid:75)ree lar(cid:74)est im(cid:83)airment c(cid:75)ar(cid:74)es.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)1
NOTES:
(cid:43)1 vs (cid:43)(cid:21) performance
BOOKLET SLIDE
(cid:43)1
(cid:21)01(cid:28)
(cid:43)1
2018
(cid:43)(cid:21)
(cid:21)01(cid:28)
(cid:43)2
2018
NII
6%
1(cid:23) (cid:27)1(cid:28)
14 006
4%
1(cid:24) 3(cid:23)(cid:27)
14 813
Im(cid:83)a(cid:76)(cid:85)ments
(40%)
(cid:11)(cid:21) (cid:24)(cid:23)3(cid:12)
(1 815)
91%
(cid:11)3 (cid:24)(cid:27)(cid:25)(cid:12)
(1 873)
NIR
E(cid:91)(cid:83)enses
5%
1(cid:21) (cid:27)(cid:26)(cid:23)
12 236
(5%)
13 1(cid:21)3
13 740
6% (cid:11)1(cid:24) (cid:24)(cid:25)(cid:24)(cid:12)
(14 756)
(2%)
(cid:11)1(cid:25) (cid:25)1(cid:23)(cid:12)
(16 876)
Net m(cid:82)neta(cid:85)(cid:92) l(cid:82)ss – (cid:61)(cid:76)m(cid:69)a(cid:69)(cid:90)e
(cid:33)100%
(cid:11)(cid:21)(cid:28)(cid:25)(cid:12)
Ass(cid:82)(cid:70)(cid:76)ate (cid:76)n(cid:70)(cid:82)me
(cid:33)100%
(cid:23)(cid:21)(cid:21)
207
(cid:14)16%
3(cid:26)1
321
D(cid:76)(cid:85)e(cid:70)t ta(cid:91)
(6%)
(cid:11)(cid:21) (cid:21)(cid:21)(cid:21)(cid:12)
(2 362)
(30%)
(cid:11)1 (cid:26)(cid:21)0(cid:12)
(2 445)
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s
3%
(cid:25) (cid:27)(cid:26)0
6 696
(17%)
(cid:24) (cid:25)3(cid:25)
6 799
Round (cid:23) rene(cid:90)able energ(cid:92)
(cid:71)eals (cid:76)n (cid:43)2 2018 (cid:69)ase(cid:15) n(cid:82)t
(cid:85)e(cid:83)eate(cid:71) (cid:76)n 2019
Im(cid:83)a(cid:76)(cid:85)ment (cid:76)n(cid:70)(cid:85)ease (cid:73)(cid:85)(cid:82)m CI(cid:37)
(cid:90)atc(cid:75)list clients in (cid:52)(cid:23)(cid:15) c(cid:92)clical
increase in R(cid:37)(cid:37) (cid:9) central
provision increase
Ne(cid:74)at(cid:76)(cid:89)e private(cid:16)e(cid:84)uit(cid:92)
revaluations (cid:74)(cid:76)(cid:89)en m(cid:82)(cid:85)e (cid:71)(cid:76)(cid:73)(cid:73)(cid:76)(cid:70)ult
ma(cid:70)(cid:85)(cid:82)e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) en(cid:89)(cid:76)(cid:85)(cid:82)nment (cid:9)
(cid:37)anco (cid:56)nico option
(cid:61)imbab(cid:90)e (cid:75)(cid:92)perinflation(cid:29) (cid:74)(cid:85)(cid:82)ss
u(cid:83) (cid:82)(cid:73) (cid:76)n(cid:70)(cid:82)me statement (cid:82)(cid:73)(cid:73)set (cid:69)(cid:92)
R296m m(cid:82)neta(cid:85)(cid:92) l(cid:82)ss(cid:29) R142m
(cid:43)E (cid:76)m(cid:83)a(cid:70)t
(cid:49)ote(cid:29) (cid:50)nly (cid:78)ey lines o(cid:73) t(cid:75)e income statement s(cid:75)o(cid:90)n.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)(cid:21)
NOTES:
12
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Net interest income (cid:14)(cid:24)(cid:8) – st(cid:85)(cid:82)n(cid:74) AIEBA (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:82)(cid:73)(cid:73)set (cid:69)(cid:92) a (cid:71)e(cid:70)(cid:85)ease (cid:76)n NIM
Net interest margin ((cid:69)(cid:83)s)
(3)
2
(6)
(4)
(2)
365
2018
En(cid:71)(cid:82)(cid:90)ment
(cid:76)m(cid:83)a(cid:70)t
Asset
m(cid:76)(cid:91)
Asset
(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)n(cid:74)
I(cid:41)RS 16
Ot(cid:75)e(cid:85)
A(cid:89)e(cid:85)a(cid:74)e (cid:76)nte(cid:85)est(cid:16)ea(cid:85)n(cid:76)n(cid:74) (cid:69)an(cid:78)(cid:76)n(cid:74) assets(cid:29) (cid:14)8.6%
352
2019
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)3
Net interest margin – e(cid:89)(cid:82)lut(cid:76)(cid:82)n (cid:82)(cid:73) T(cid:76)e(cid:85) 2 (cid:9) SUD (cid:83)(cid:85)(cid:76)(cid:70)(cid:76)n(cid:74)
BOOKLET SLIDE
(cid:51)ricing ((cid:69)(cid:83)s a(cid:69)(cid:82)(cid:89)e (cid:45)IBAR)
ABIL
Nene(cid:74)ate
S(cid:82)(cid:89)e(cid:85)e(cid:76)(cid:74)n
(cid:71)(cid:82)(cid:90)n(cid:74)(cid:85)a(cid:71)es
S(cid:82)ut(cid:75) A(cid:73)(cid:85)(cid:76)(cid:70)an ele(cid:70)t(cid:76)(cid:82)ns
Mar
14
Apr
14
Jun
14
Oct
14
Nov
14
Feb
15
Apr
15
May
15
Jun
15
Jul
15
Nov
15
Feb
16
May
16
Jul
16
Sep
16
Feb
17
Mar
17
May
17
Jun
17
Feb
18
Mar
18
Jul
18
Nov
18
Jan
19
Feb
19
Mar
19
Apr
19
May
19
Jun
19
Jul
19
Sep
19
Oct
19
Nov
19
Jan
20
3 year SUD
5 year SUD
7 year SUD
10 - 12 year SUD
Tier 2
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)(cid:23)
NEDBANK GROUP – ANNUAL RESULTS 2019
13
NOTES:
450
400
350
300
250
200
150
100
50
-
NOTES:
Net banking advances (cid:14)(cid:26)(cid:8) (cid:237) m(cid:82)mentum (cid:76)n RBB (cid:9) s(cid:82)l(cid:76)(cid:71)
(cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n (cid:38)IB
BOOKLET SLIDE
(cid:37)anking vs trading advances (R(cid:69)n)
CI(cid:37) (cid:9) R(cid:37)(cid:37) banking advances (R(cid:69)n)
800
700
600
500
400
NOTES:
350
300
250
200
(cid:43)1
15
(cid:43)2
15
(cid:43)1
16
(cid:43)2
16
(cid:43)1
17
(cid:43)2
17
(cid:43)1
18
(cid:43)2
18
(cid:43)1
19
(cid:43)2
19
(cid:43)1
15
(cid:43)2
15
(cid:43)1
16
(cid:43)2
16
(cid:43)1
17
(cid:43)2
17
(cid:43)1
18
(cid:43)2
18
(cid:43)1
19
(cid:43)2
19
Ban(cid:78)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es
T(cid:85)a(cid:71)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es
(cid:38)IB (e(cid:91)(cid:70)l t(cid:85)a(cid:71)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es)
RBB
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)(cid:24)
Gross banking advances (cid:14)(cid:26)(cid:8) – sele(cid:70)t(cid:76)(cid:89)e (cid:82)(cid:85)(cid:76)(cid:74)(cid:76)nat(cid:76)(cid:82)n
Gross banking advances (R(cid:69)n)
(cid:37)(cid:36)(cid:28)00 market s(cid:75)are(cid:21) (%)
(cid:58)(cid:75)(cid:82)lesale
Reta(cid:76)l
Le(cid:89)e(cid:85)a(cid:74)(cid:76)n(cid:74) (cid:85)elat(cid:76)(cid:82)ns(cid:75)(cid:76)(cid:83)s
(cid:9) (cid:83)(cid:76)(cid:83)el(cid:76)ne
Sele(cid:70)t(cid:76)(cid:89)e (cid:82)(cid:85)(cid:76)(cid:74)(cid:76)nat(cid:76)(cid:82)n (cid:9) un(cid:76)(cid:84)ue
(cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)n(cid:76)n(cid:74)
(cid:14)8%
(cid:14)9%
(cid:14)50%
(14%)
(cid:14)4%
(cid:14)7%
(cid:14)12%
(cid:14)3%
S(cid:75)are
(cid:60)o(cid:92)
trend
(cid:38)(cid:82)mme(cid:85)(cid:70)(cid:76)al (cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92)
3(cid:27)(cid:17)(cid:26)
(0.4)
(cid:38)(cid:82)(cid:85)e (cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)ate3
(cid:21)1(cid:17)(cid:21)
(cid:14)0.6
(cid:43)(cid:82)me l(cid:82)ans
1(cid:23)(cid:17)(cid:23)
(0.1)
6
6
1
0
8
1
2
8
1
9
9
1
2
2
5
1
4
3
9
2
6
5
1
2
6
1
1
2
1
0
3
1
2
2
5
2
(cid:57)e(cid:75)(cid:76)(cid:70)le (cid:73)(cid:76)nan(cid:70)e4
3(cid:25)(cid:17)(cid:23)
(cid:14)0.6
Pe(cid:85)s(cid:82)nal l(cid:82)ans
10(cid:17)(cid:21)
(0.2)
7
1
7
1
(cid:38)a(cid:85)(cid:71)
13(cid:17)0
(0.7)
(cid:38)(cid:82)mme(cid:85)(cid:70)(cid:76)al
(cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92)
Te(cid:85)m
l(cid:82)ans
1
L(cid:82)ans t(cid:82)
(cid:69)an(cid:78)s
Ot(cid:75)e(cid:85)
l(cid:82)ans
(cid:43)(cid:82)me
l(cid:82)ans
(cid:57)e(cid:75)(cid:76)(cid:70)le
(cid:73)(cid:76)nan(cid:70)e
Pe(cid:85)s(cid:82)nal
l(cid:82)ans
(cid:38)a(cid:85)(cid:71)
2018
2019
1 (cid:55)erm loans include a reclassi(cid:73)ication o(cid:73) some in(cid:89)estment (cid:69)an(cid:78)in(cid:74) loans (cid:73)rom ot(cid:75)er loans. | 2 (cid:37)(cid:36)(cid:28)(cid:19)(cid:19) at (cid:39)ecem(cid:69)er 2(cid:19)1(cid:28) (cid:11)com(cid:83)ared (cid:90)it(cid:75) (cid:39)ecem(cid:69)er 2(cid:19)1(cid:27)(cid:12).
(cid:22) Core cor(cid:83)orate loans e(cid:91)clude (cid:89)olatile s(cid:75)ort(cid:16)term lendin(cid:74). | (cid:23) (cid:57)e(cid:75)icle (cid:73)inance (cid:83)er (cid:37)(cid:36)(cid:28)(cid:19)(cid:19) com(cid:83)rises total lease (cid:9) instalment sales (cid:73)rom a (cid:75)ouse(cid:75)old (cid:83)ers(cid:83)ecti(cid:89)e.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:21)(cid:25)
NOTES:
14
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Deposits (cid:14)(cid:28)(cid:17)(cid:24)(cid:8) – (cid:70)(cid:82)mm(cid:76)tte(cid:71) t(cid:82) (cid:74)(cid:85)(cid:82)(cid:90) (cid:85)eta(cid:76)l (cid:9) (cid:70)(cid:82)mme(cid:85)(cid:70)(cid:76)al (cid:71)e(cid:83)(cid:82)s(cid:76)ts(cid:15) (cid:90)(cid:75)(cid:76)le
mana(cid:74)(cid:76)n(cid:74) t(cid:75)e (cid:73)un(cid:71)(cid:76)n(cid:74) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)le
Deposits (R(cid:69)n)
(cid:37)(cid:36)(cid:28)00 market s(cid:75)are1
31
1
16
1
(cid:27)(cid:21)(cid:25)
29
(cid:28)0(cid:23)
S(cid:75)are
(cid:60)o(cid:92)
trend
(cid:58)(cid:75)(cid:82)lesale
(cid:21)3(cid:17)(cid:21)
(cid:14)1.6
(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)ate (n(cid:82)n(cid:16)
(cid:73)(cid:76)nan(cid:70)(cid:76)al)
1(cid:25)(cid:17)(cid:24)
(0.1)
(cid:43)(cid:82)use(cid:75)(cid:82)l(cid:71)
1(cid:25)(cid:17)(cid:28)
(1.1)
(cid:41)(cid:82)(cid:85)e(cid:76)(cid:74)n
(cid:70)u(cid:85)(cid:85)en(cid:70)(cid:92)
1(cid:21)(cid:17)0
(cid:14)1.6
(cid:14)5%
(cid:14)1%
(cid:14)9%
(cid:14)3%
(cid:14)34%
2018
RBB
(cid:58)ealt(cid:75)
(cid:38)IB
A(cid:73)(cid:85)(cid:76)(cid:70)a
Re(cid:74)(cid:76)(cid:82)ns
(cid:38)ent(cid:85)e
2019
(cid:47)CR(cid:29) 1(cid:21)(cid:24)(cid:8) (m(cid:76)n (cid:85)e(cid:74)(cid:29) 100%)
NSFR(cid:29) 113(cid:8) (m(cid:76)n (cid:85)e(cid:74)(cid:29) 100%)
(cid:47)oan(cid:16)to(cid:16)deposit ratio(cid:29) (cid:27)(cid:27)(cid:8) (2018(cid:29) 89%)
(cid:47)ong(cid:16)term funding ratio(cid:29) 30(cid:8) (2018(cid:29) 26%)
1 (cid:37)(cid:36)(cid:28)(cid:19)(cid:19) at (cid:39)ec 2(cid:19)1(cid:28).
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
(cid:21)(cid:26)
NIR gro(cid:90)t(cid:75) flat – s(cid:82)l(cid:76)(cid:71) un(cid:71)e(cid:85)l(cid:92)(cid:76)n(cid:74) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:82)(cid:73)(cid:73)set (cid:69)(cid:92) (cid:83)(cid:85)(cid:76)(cid:89)ate e(cid:84)u(cid:76)t(cid:92) (cid:85)e(cid:89)aluat(cid:76)(cid:82)ns
NIR (Rm)
(cid:14)3%
(cid:14)2%
(1%)
(62%)
(11%)
9
3
7
8
1
4
2
5
4
7
3
8
1
2
6
2
(cid:38)(cid:82)mm(cid:76)ss(cid:76)(cid:82)n
(cid:9) (cid:73)ees
T(cid:85)a(cid:71)(cid:76)n(cid:74)
(cid:76)n(cid:70)(cid:82)me
Insu(cid:85)an(cid:70)e
(cid:76)n(cid:70)(cid:82)me
P(cid:85)(cid:76)(cid:89)ate
e(cid:84)u(cid:76)t(cid:92)
5
3
6
Ot(cid:75)e(cid:85)(cid:239)
1 (cid:53)e(cid:83)resents sundry income(cid:15) in(cid:89)estment income (cid:9) (cid:73)air(cid:16)(cid:89)alue ad(cid:77)ustments.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
(cid:46)e(cid:92) drivers
▪ Commission (cid:9) fees
– S(cid:82)l(cid:76)(cid:71) un(cid:71)e(cid:85)l(cid:92)(cid:76)n(cid:74) Reta(cid:76)l t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal NIR
(cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)(cid:29) (cid:14)6% ((cid:71)ee(cid:83)e(cid:85) s(cid:75)a(cid:85)e (cid:82)(cid:73) (cid:90)allet (cid:9) ma(cid:76)n(cid:16)
(cid:69)an(cid:78)e(cid:71) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n u(cid:83)(cid:83)e(cid:85) (cid:70)l(cid:76)ent se(cid:74)ments)
– Su(cid:69)(cid:71)ue(cid:71) (cid:70)l(cid:76)ent a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92)
Trading – (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92) l(cid:82)(cid:90) (cid:89)(cid:82)lumes(cid:15) l(cid:82)(cid:90) (cid:89)(cid:82)lat(cid:76)l(cid:76)t(cid:92)
(cid:9) a (cid:73)(cid:76)(cid:85)m 2018 (cid:69)ase
Insurance – (cid:74)(cid:82)(cid:82)(cid:71) sales (cid:89)(cid:82)lume (cid:76)n(cid:70)(cid:85)eases (cid:82)(cid:73)(cid:73)set
(cid:69)(cid:92) (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:90)eat(cid:75)e(cid:85)(cid:16)(cid:85)elate(cid:71) (cid:70)la(cid:76)ms (cid:76)n (cid:43)1 19
(cid:51)rivate e(cid:84)uit(cid:92) – (cid:85)e(cid:73)le(cid:70)t(cid:76)(cid:89)e (cid:82)(cid:73) (cid:76)m(cid:83)a(cid:70)t (cid:82)(cid:73) (cid:90)ea(cid:78) SA
e(cid:70)(cid:82)n(cid:82)m(cid:92) (cid:82)n (cid:85)e(cid:89)aluat(cid:76)(cid:82)ns (cid:82)(cid:73) a (cid:73)e(cid:90) s(cid:83)e(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:70)(cid:82)unte(cid:85)s
▪
▪
▪
▪ (cid:50)t(cid:75)er NIR – (cid:76)n(cid:70)lu(cid:71)es (cid:70)(cid:82)st (cid:82)(cid:73) e(cid:91)e(cid:85)(cid:70)(cid:76)s(cid:76)n(cid:74) an (cid:82)(cid:83)t(cid:76)(cid:82)n
t(cid:82) (cid:76)n(cid:70)(cid:85)ease (cid:82)u(cid:85) s(cid:75)a(cid:85)e(cid:75)(cid:82)l(cid:71)(cid:76)n(cid:74) (cid:76)n Ban(cid:70)(cid:82) (cid:210)n(cid:76)(cid:70)(cid:82)
(R140m)
(cid:21)(cid:27)
NEDBANK GROUP – ANNUAL RESULTS 2019
15
(cid:51)rivate e(cid:84)uit(cid:92) – 2019 (cid:85)e(cid:71)u(cid:70)t(cid:76)(cid:82)n (cid:71)(cid:85)(cid:76)(cid:89)en (cid:69)(cid:92) less (cid:71)(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71)s
(cid:85)e(cid:70)e(cid:76)(cid:89)e(cid:71) (cid:9) (cid:71)(cid:82)(cid:90)n(cid:90)a(cid:85)(cid:71) (cid:85)e(cid:89)aluat(cid:76)(cid:82)ns (un(cid:85)eal(cid:76)se(cid:71) (cid:76)n(cid:70)(cid:82)me)
BOOKLET SLIDE
(cid:51)rivate e(cid:84)uit(cid:92) investments1 (R(cid:69)n)
(cid:46)e(cid:92) income statement drivers (Rm)
8
6
4
2
(cid:16)
(cid:11)(cid:25)(cid:21)(cid:8)(cid:12)
(cid:25)(cid:28)(cid:26)
15
330
509
(157)
(cid:21)(cid:25)(cid:21)
144
45
534
(461)
15
16
17
18
19
Unl(cid:76)ste(cid:71) (cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92)
In(cid:89)estment Ban(cid:78)(cid:76)n(cid:74)
1 (cid:49)um(cid:69)ers (cid:75)a(cid:89)e (cid:69)een restated to included (cid:75)istoric in(cid:89)estments (cid:83)re(cid:89)iously disclosed in
in(cid:89)estment in associates (cid:9) (cid:77)oint (cid:89)entures to ensure com(cid:83)ara(cid:69)ility.
NEDBANK GROUP LIMITED – Annual Results 2019
18
Real(cid:76)se(cid:71) (cid:76)n(cid:70)(cid:82)me
Un(cid:85)eal(cid:76)se(cid:71) (cid:76)n(cid:70)(cid:82)me
19
D(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71)s (cid:85)e(cid:70)e(cid:76)(cid:89)e(cid:71)
Ot(cid:75)e(cid:85) (cid:76)n(cid:70)(cid:82)me
NOTES:
Credit loss ratio up to (cid:27)(cid:21) bps – n(cid:82)(cid:85)mal(cid:76)sat(cid:76)(cid:82)n (cid:82)(cid:73) (cid:70)(cid:85)e(cid:71)(cid:76)t l(cid:82)sses (cid:82)(cid:73)(cid:73) a l(cid:82)(cid:90) (cid:69)ase
(cid:9) (cid:76)n(cid:70)(cid:85)ease(cid:71) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)s(cid:76)(cid:82)n(cid:76)n(cid:74) (cid:76)n (cid:43)2 2019
Group C(cid:47)R1 ((cid:69)(cid:83)s)
Cluster C(cid:47)R ((cid:69)(cid:83)s)
77
68
82
49
53
138
128
106
108
101
51
26
16
4
13
14
18
15
16
17
18
19
2
(cid:38)IB
3
RBB
(cid:58)ealt(cid:75)
4
5
NAR
(cid:36)ve banking
advances
46.3%
46.5%
4.2%
3.0%
18
(cid:43)1 19
19
2 CI(cid:37) t(cid:75)rou(cid:74)(cid:75)(cid:16)t(cid:75)e(cid:16)cycle tar(cid:74)et ran(cid:74)e(cid:29) 1(cid:24)(cid:16)(cid:23)(cid:24) (cid:69)(cid:83)s. | (cid:22) (cid:53)(cid:37)(cid:37) t(cid:75)rou(cid:74)(cid:75)(cid:16)t(cid:75)e(cid:16)cycle tar(cid:74)et ran(cid:74)e(cid:29) 1(cid:22)(cid:19)(cid:177)1(cid:27)(cid:19) (cid:69)(cid:83)s.
(cid:23) (cid:58)ealt(cid:75) t(cid:75)rou(cid:74)(cid:75)(cid:16)t(cid:75)e(cid:16)cycle tar(cid:74)et ran(cid:74)e(cid:29) 2(cid:19)(cid:177)(cid:23)(cid:19) (cid:69)(cid:83)s. | (cid:24) (cid:49)(cid:36)(cid:53) t(cid:75)rou(cid:74)(cid:75)(cid:16)t(cid:75)e(cid:16)cycle tar(cid:74)et ran(cid:74)e(cid:29) (cid:26)(cid:24)(cid:177)1(cid:19)(cid:19) (cid:69)(cid:83)s.
1 (cid:49)ed(cid:69)an(cid:78) t(cid:75)rou(cid:74)(cid:75)(cid:16)t(cid:75)e(cid:16)cycle tar(cid:74)et ran(cid:74)e(cid:29) (cid:25)(cid:19)(cid:177)1(cid:19)(cid:19) (cid:69)(cid:83)s.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
16
NEDBANK GROUP – ANNUAL RESULTS 2019
(cid:21)(cid:28)
30
RESULTS
PRESENTATION
Impairments (cid:14)(cid:25)(cid:25)(cid:8) – (cid:76)n(cid:70)(cid:85)eases a(cid:70)(cid:85)(cid:82)ss sta(cid:74)e 1(cid:15) 2 (cid:9) 3 (cid:76)m(cid:83)a(cid:76)(cid:85)ments
Impairment drivers (Rm)
Stage 1 coverage (%)
1 491
580
370
0.45
De(cid:70) 18
0.49
De(cid:70) 19
Stage (cid:21) coverage (%)
3 688
6 129
2018
Sta(cid:74)e 1
Sta(cid:74)e 2
Sta(cid:74)e 3
2019
4.97
De(cid:70) 18
5.31
De(cid:70) 19
NEDBANK GROUP LIMITED – Annual Results 2019
31
NOTES:
Stage 3 advances – (cid:76)n(cid:70)(cid:85)ease (cid:76)n RBB (cid:71)e(cid:73)aults as t(cid:75)e ma(cid:70)(cid:85)(cid:82)e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70)
en(cid:89)(cid:76)(cid:85)(cid:82)nment (cid:71)ete(cid:85)(cid:76)(cid:82)(cid:85)ate(cid:71)(cid:15) (cid:82)(cid:73)(cid:73)set (cid:69)(cid:92) su(cid:70)(cid:70)ess(cid:73)ul (cid:85)est(cid:85)u(cid:70)tu(cid:85)es (cid:76)n (cid:38)IB
Stage 3 advances1 (R(cid:69)n)
Stage 3 coverage (%)
Total
Ot(cid:75)e(cid:85)
(cid:38)IB
(cid:14)6%
(cid:21)(cid:24)(cid:17)(cid:21)
2.2
5.7
(5%)
(cid:21)(cid:25)(cid:17)(cid:27)
2.3
5.4
(cid:14)4% (cid:21)(cid:26)(cid:17)(cid:25)
2.4
(cid:14)10% (cid:92)(cid:82)(cid:92)
(24%)
4.1
(28%) (cid:92)(cid:82)(cid:92)
36.8
37.1
38.0
De(cid:70) 18
(cid:45)un 19
De(cid:70) 19
Stage 3 advances(cid:18)gross advances (%)
RBB
17.3
(cid:14)11%
19.2
(cid:14)10%
21.1
(cid:14)22% (cid:92)(cid:82)(cid:92)
De(cid:70) 18
(cid:45)un 19
De(cid:70) 19
De(cid:70) 18
(cid:45)un 19
De(cid:70) 19
3.47
3.57
3.55
1 (cid:40)(cid:91)cludes (cid:41)(cid:57)(cid:50)CI
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
3(cid:21)
NEDBANK GROUP – ANNUAL RESULTS 2019
17
E(cid:91)penses (cid:14)(cid:21)(cid:8) – (cid:74)(cid:82)(cid:82)(cid:71) (cid:70)(cid:82)st mana(cid:74)ement (cid:76)n (cid:85)es(cid:83)(cid:82)nse t(cid:82) sl(cid:82)(cid:90)(cid:76)n(cid:74) (cid:85)e(cid:89)enue
(cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:9) (cid:69)ene(cid:73)(cid:76)ts (cid:73)(cid:85)(cid:82)m (cid:71)(cid:76)(cid:74)(cid:76)t(cid:76)sat(cid:76)(cid:82)n
E(cid:91)penses (Rm)
(cid:46)e(cid:92) drivers
D(cid:76)(cid:74)(cid:76)tal (cid:9) TOM
(cid:69)ene(cid:73)(cid:76)ts
(cid:14)5%
(24%)
(cid:14)12%
(cid:14)1%
0
5
5
2
8
7
8
4
In(cid:70)ent(cid:76)(cid:89)es
(STI (cid:9) LTI)
(cid:38)(cid:82)m(cid:83)ute(cid:85)
(cid:83)(cid:85)(cid:82)(cid:70)ess(cid:76)n(cid:74)
9
7
9
9
Ot(cid:75)e(cid:85)
2
7
7
4
1
Sta(cid:73)(cid:73)
(cid:83)a(cid:70)(cid:78)a(cid:74)es
(cid:9) (cid:82)t(cid:75)e(cid:85)
▪
▪
Staff packages
– A(cid:89)e(cid:85)a(cid:74)e sala(cid:85)(cid:92) (cid:76)n(cid:70)(cid:85)eases (cid:82)(cid:73) 5.4%
– Re(cid:71)u(cid:70)t(cid:76)(cid:82)n (cid:76)n (cid:75)ea(cid:71)(cid:70)(cid:82)unt (cid:82)(cid:73) 1 874
Incentives – STI (cid:71)e(cid:70)l(cid:76)ne (cid:33) ea(cid:85)n(cid:76)n(cid:74)s (cid:71)e(cid:70)l(cid:76)ne
▪ Computer processing
(cid:3013) S(cid:82)(cid:73)t(cid:90)a(cid:85)e am(cid:82)(cid:85)t(cid:76)sat(cid:76)(cid:82)n (cid:14)22%
(cid:3013) St(cid:85)(cid:82)n(cid:74) (cid:89)(cid:82)lume (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
▪ (cid:50)t(cid:75)er costs
(cid:3013) Bene(cid:73)(cid:76)ts (cid:73)(cid:85)(cid:82)m TOM (R1.1(cid:69)n (cid:70)umulat(cid:76)(cid:89)e)
(cid:3013) R134m (cid:60)ES (cid:70)(cid:82)sts
(cid:3013) Res(cid:76)(cid:71)ual PRMA (cid:69)ene(cid:73)(cid:76)t(cid:29) R354m
NEDBANK GROUP LIMITED – Annual Results 2019
33
NOTES:
E(cid:91)penses – (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)ess (cid:82)n (cid:78)e(cid:92) (cid:70)(cid:82)st (cid:82)(cid:83)t(cid:76)m(cid:76)sat(cid:76)(cid:82)n (cid:76)n(cid:76)t(cid:76)at(cid:76)(cid:89)es
BOOKLET SLIDE
Central costs(cid:15) propert(cid:92) (cid:9)
procurement
Tec(cid:75)nolog(cid:92)
(cid:51)rocess
optimisation
R(cid:37)(cid:37) (cid:9) branc(cid:75)
optimisation
▪ Group s(cid:75)ared services
▪ Improved IT pro(cid:77)ect deliver(cid:92)
(cid:3013) Re(cid:71)u(cid:70)e(cid:71) num(cid:69)e(cid:85) (cid:82)(cid:73) sta(cid:73)(cid:73)
▪ (cid:51)rocurement savings
(cid:3013) Pa(cid:83)e(cid:85) (cid:70)(cid:82)nsum(cid:83)t(cid:76)(cid:82)n (cid:378) (cid:21)(cid:24)(cid:8)
(826 t(cid:82)ns (cid:73)(cid:85)(cid:82)m 1 104 t(cid:82)ns)
(cid:3013) P(cid:85)(cid:82)(cid:70)u(cid:85)ement s(cid:83)en(cid:71) (cid:378) 3(cid:8)
(R18.1(cid:69)n (cid:70)as(cid:75)(cid:73)l(cid:82)(cid:90) (cid:76)n (cid:181)19)
▪ Central propert(cid:92) savings
(cid:3013) (cid:38)am(cid:83)us s(cid:76)tes(cid:29) (cid:378) (cid:23)
(27 s(cid:76)tes(cid:15) LT ta(cid:85)(cid:74)et(cid:29) 22)
(cid:3013) IT (cid:83)(cid:85)(cid:82)(cid:77)e(cid:70)ts us(cid:76)n(cid:74) a(cid:74)(cid:76)le (cid:9) (cid:75)(cid:92)(cid:69)(cid:85)(cid:76)(cid:71)
met(cid:75)(cid:82)(cid:71)(cid:82)l(cid:82)(cid:74)(cid:76)es (cid:376) (cid:27)0(cid:8)
((cid:73)(cid:85)(cid:82)m 21% t(cid:90)(cid:82) (cid:92)ea(cid:85)s a(cid:74)(cid:82))
▪ Cloud services
(cid:3013) sa(cid:89)(cid:76)n(cid:74)s (cid:73)(cid:85)(cid:82)m m(cid:76)(cid:74)(cid:85)at(cid:76)(cid:82)n t(cid:82) (cid:70)l(cid:82)u(cid:71) (cid:82)(cid:89)e(cid:85)
t(cid:76)me ((cid:181)19(cid:29) O(cid:73)(cid:73)(cid:76)(cid:70)e 360 (cid:9) sta(cid:73)(cid:73) ema(cid:76)l)
▪ IT s(cid:92)stems1
(cid:3013) (cid:38)(cid:82)(cid:85)e s(cid:92)stems (cid:378) t(cid:82) 11(cid:26)
(ta(cid:85)(cid:74)et (cid:82)(cid:73) (cid:31) 85 (cid:69)(cid:92) (cid:181)20)
▪ Data(cid:16)driven intelligence
(cid:3013) (cid:41)l(cid:82)(cid:82)(cid:85) s(cid:83)a(cid:70)e sa(cid:89)e(cid:71) (cid:376) (cid:24)(cid:23)k m(cid:21)
(s(cid:76)n(cid:70)e (cid:181)16(cid:15) LT ta(cid:85)(cid:74)et(cid:29)
(cid:33) 100(cid:78) m2)
▪ General costs – e(cid:91)(cid:83)ense (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)(cid:29)
▪ T(cid:85)a(cid:89)el (cid:9) (cid:70)(cid:82)mms(cid:29) (cid:377)0(cid:8)
▪ Ma(cid:85)(cid:78)et(cid:76)n(cid:74)(cid:29) (cid:378)(cid:24)(cid:8)
▪ Digital client onboarding (cid:9) sales
((cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74) (cid:9) (cid:69)a(cid:70)(cid:78) (cid:82)(cid:73)(cid:73)(cid:76)(cid:70)e (cid:69)ene(cid:73)(cid:76)ts)
▪ Number of outlets (cid:177) ongoing
optimisation
(cid:3013) PL (cid:9) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal sales (cid:376) (cid:33)(cid:28)0(cid:8)
(T(cid:82)tal (cid:71)(cid:76)(cid:74)(cid:76)tal sales(cid:29) 21%(cid:15) LT (cid:71)(cid:76)(cid:74)(cid:76)tal
sales ta(cid:85)(cid:74)et(cid:29) (cid:33) 75%)
(cid:3013) (cid:38)l(cid:82)se(cid:71) (cid:21)1 (cid:83)(cid:82)(cid:76)nts (cid:82)(cid:73) (cid:83)(cid:85)esen(cid:70)e
(ta(cid:85)(cid:74)et (cid:71)e(cid:83)en(cid:71)ent (cid:82)n (cid:71)(cid:76)(cid:74)(cid:76)tal
u(cid:83)ta(cid:78)e).
▪ Self(cid:16)service (cid:9) staff(cid:16)assisted banking
▪ (cid:37)ranc(cid:75) floor space
– Ne(cid:90) (cid:71)(cid:76)(cid:74)(cid:76)tal se(cid:85)(cid:89)(cid:76)(cid:70)es (cid:82)n m(cid:82)(cid:69)(cid:76)le(cid:15) a(cid:83)(cid:83)
(cid:9) (cid:90)e(cid:69)(cid:29) (cid:376) 11(cid:23)
(51 (cid:76)n 2018(cid:15) ta(cid:85)(cid:74)et(cid:29) (cid:33) 180 (cid:69)(cid:92) (cid:181)20)
(cid:3013) Sa(cid:89)e(cid:71) (cid:376) (cid:23)(cid:21)k m(cid:21) t(cid:82) (cid:71)ate
((cid:73)(cid:85)(cid:82)m 33(cid:78) m2 (cid:76)n 18 (cid:9) ta(cid:85)(cid:74)et
(cid:33) 49(cid:78) m2 (cid:69)(cid:92) (cid:181)20)
– Sel(cid:73)(cid:16)se(cid:85)(cid:89)(cid:76)(cid:70)e (cid:70)as(cid:75) (cid:71)e(cid:83)(cid:82)s(cid:76)ts(cid:29)
▪ Sales (cid:9) service integration
(cid:376) (cid:26)3(cid:8) (cid:82)(cid:73) all (cid:70)as(cid:75) (61% (cid:76)n (cid:181)18)
▪ Robotics (cid:9) automation
(cid:3013) RPAs (cid:76)n use(cid:29) (cid:376) (cid:33) 300
((cid:73)(cid:85)(cid:82)m 51 (cid:76)n 18(cid:15) e(cid:91)(cid:70)l t(cid:75)e (cid:57)BS (cid:33) 160
(cid:82)n(cid:69)(cid:82)a(cid:85)(cid:71)(cid:76)n(cid:74) (cid:69)(cid:82)ts)
(cid:3013) ne(cid:90) (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) m(cid:82)(cid:71)el(cid:15) (cid:69)us(cid:76)ness
(cid:85)e(cid:70)(cid:82)n(cid:73)(cid:76)(cid:74)u(cid:85)at(cid:76)(cid:82)n (cid:9) s(cid:76)m(cid:83)l(cid:76)(cid:73)(cid:76)(cid:70)at(cid:76)(cid:82)n
(m(cid:82)stl(cid:92) (cid:70)(cid:82)m(cid:83)lete (cid:69)(cid:92) 2020)
▪ (cid:37)ackoffice (cid:9) R(cid:37)(cid:37) support
function optimisation
NEDBANK GROUP LIMITED – Annual Results 2019
3(cid:23)
(cid:50)verall (cid:75)eadcount reduction (cid:378) 1 (cid:27)(cid:26)(cid:23) ((cid:90)(cid:76)t(cid:75) (cid:82)n(cid:74)(cid:82)(cid:76)n(cid:74) (cid:85)e(cid:71)u(cid:70)t(cid:76)(cid:82)n (cid:83)lanne(cid:71) (cid:76)nt(cid:82) 2020(cid:18)1)
NOTES:
18
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
IT spend reducing from (cid:21)0(cid:21)0
BOOKLET SLIDE
IT soft(cid:90)are development spend (R(cid:69)n)
Capitalised IT costs (R(cid:69)n)
(cid:36)mortisation c(cid:75)arge (R(cid:69)n)
Re(cid:74)ulat(cid:82)(cid:85)(cid:92) (cid:83)(cid:85)(cid:82)(cid:77)e(cid:70)ts alm(cid:82)st (cid:70)(cid:82)m(cid:83)lete
(cid:9) (cid:71)e(cid:89)el(cid:82)(cid:83)ment (cid:70)(cid:82)st (cid:82)n ne(cid:90)
te(cid:70)(cid:75)n(cid:82)l(cid:82)(cid:74)(cid:76)es (cid:71)e(cid:70)(cid:85)eas(cid:76)n(cid:74)
2.3 2.1 2.1
1.7
1.2
1.0
8.3
7.4
6.0
4.6
3.1 3.5
1.2
1.0
0.8 0.8
0.7 0.7
14 15 16 17 18 19 20 21 22
14 15 16 17 18 19 20 21 22
14 15 16 17 18 19 20 21 22
(cid:38)(cid:82)m(cid:83)l(cid:76)an(cid:70)e(cid:16)(cid:85)elate(cid:71)
Illust(cid:85)at(cid:76)(cid:89)e (cid:82)nl(cid:92)
NEDBANK GROUP LIMITED – Annual Results 2019
3(cid:24)
NOTES:
NOTES:
(cid:61)imbab(cid:90)e – (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:76)m(cid:83)a(cid:70)ts (cid:82)(cid:73) (cid:75)(cid:92)(cid:83)e(cid:85)(cid:76)n(cid:73)lat(cid:76)(cid:82)n (cid:9) (cid:76)m(cid:83)a(cid:76)(cid:85)ment (cid:82)(cid:73) le(cid:74)a(cid:70)(cid:92) (cid:71)e(cid:69)t
C(cid:51)I inde(cid:91)
(cid:61)(cid:58)(cid:47) (cid:29) (cid:61)(cid:36)R e(cid:91)c(cid:75)ange rate
3.71
(cid:46)e(cid:92) drivers
(cid:43)(cid:92)perinflationar(cid:92) accounting
▪ Re(cid:69)ase(cid:71) De(cid:70) (cid:182)18 e(cid:84)u(cid:76)t(cid:92)
(R246m)
(cid:25)(cid:17)(cid:21)1(cid:91)
2
5
5
▪ Ga(cid:76)ns (cid:73)(cid:85)(cid:82)m (cid:76)n(cid:71)e(cid:91)(cid:76)n(cid:74) (cid:82)(cid:73) n(cid:82)n(cid:16)m(cid:82)neta(cid:85)(cid:92) assets2 R30m
3
7
4
3
0
4
▪ In(cid:70)(cid:82)me statement (cid:76)n(cid:71)e(cid:91)(cid:76)n(cid:74)1 (R80m)
Net m(cid:82)neta(cid:85)(cid:92) l(cid:82)ss
(cid:11)R(cid:21)(cid:28)(cid:25)m(cid:12)
▪ In(cid:70)(cid:82)me statement (cid:76)n(cid:71)e(cid:91)(cid:76)n(cid:74)1 R80m
0
9
2
1.94
7
4
9 2
0
3 2
7
1
0
0
1
4
0
1
0
1
1
4
2
1
8
9 9
8
▪ Less m(cid:76)n(cid:82)(cid:85)(cid:76)t(cid:76)es
R74m
(cid:11)R1(cid:23)(cid:21)m(cid:12)
0.83
(cid:50)t(cid:75)er c(cid:75)anges (cid:177) blocked funds
▪
Im(cid:83)a(cid:76)(cid:85)ment (cid:82)(cid:73) le(cid:74)a(cid:70)(cid:92) (cid:71)e(cid:69)t (R44m)
Si(cid:93)e of Nedbank (cid:61)imbab(cid:90)e in Nedbank
(cid:11)R1(cid:27)(cid:25)m(cid:12)
De(cid:70) (cid:45)an (cid:41)e(cid:69) Ma(cid:85) A(cid:83)(cid:85) Ma(cid:92) (cid:45)un (cid:45)ul Au(cid:74) Se(cid:83) O(cid:70)t N(cid:82)(cid:89) De(cid:70)
▪
0.1% (cid:82)(cid:73) t(cid:82)tal e(cid:84)u(cid:76)t(cid:92) (R123m (cid:18) R87.4(cid:69)n)
1 Inde(cid:91)in(cid:74) o(cid:73) I(cid:54) lines o(cid:73) (cid:53)(cid:27)(cid:19)m (cid:75)as an equal (cid:9) o(cid:83)(cid:83)osite c(cid:75)ar(cid:74)e in t(cid:75)e I(cid:54).
2 (cid:49)ed(cid:69)an(cid:78) (cid:18) (cid:69)an(cid:78)s li(cid:78)ely to (cid:69)e small in (cid:83)ro(cid:83)ortion to ot(cid:75)er com(cid:83)anies(cid:15) t(cid:75)ere(cid:73)ore not enou(cid:74)(cid:75) to o(cid:73)(cid:73)set im(cid:83)act o(cid:73) re(cid:69)asin(cid:74) equity.
NEDBANK GROUP LIMITED – Annual Results 2019
3(cid:25)
NEDBANK GROUP – ANNUAL RESULTS 2019
19
ETI associate income – (cid:85)e(cid:73)le(cid:70)ts ETI (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)ess(cid:15) alt(cid:75)(cid:82)u(cid:74)(cid:75) en(cid:89)(cid:76)(cid:85)(cid:82)nment (cid:76)n
N(cid:76)(cid:74)e(cid:85)(cid:76)a (cid:85)ema(cid:76)ns (cid:70)(cid:75)allen(cid:74)(cid:76)n(cid:74) (cid:9) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:75)as sl(cid:82)(cid:90)e(cid:71)
(cid:36)ssociate income from ETI1 (Rm)
870
ETI (cid:28)(cid:48) (cid:21)01(cid:28) results
(cid:52)1
191
▪ N(cid:76)(cid:74)e(cid:85)(cid:76)an (cid:82)(cid:83)e(cid:85)at(cid:76)(cid:82)ns
608
668
(cid:52)2
190
(cid:3013) (cid:38)(cid:75)allen(cid:74)(cid:76)n(cid:74) e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70)
(cid:9) (cid:85)e(cid:74)ulat(cid:82)(cid:85)(cid:92)
en(cid:89)(cid:76)(cid:85)(cid:82)nment
(cid:3013) NPLs (cid:85)ema(cid:76)n ele(cid:89)ate(cid:71)
180
(cid:3013)
(cid:7)1m (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (cid:9)
ROE(cid:29) 0.1%
107
▪ R(cid:82)(cid:69)ust (cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e (cid:76)n (cid:82)t(cid:75)e(cid:85)
ETI (cid:74)e(cid:82)(cid:74)(cid:85)a(cid:83)(cid:75)(cid:76)es
(cid:3013) ROEs (cid:33) 25%
(cid:52)3
(cid:52)4
(125)
(744)
15
16
17
18
19
1 (cid:40)(cid:55)I accounted (cid:73)or one quarter in arrear.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
ETI carr(cid:92)ing value – (cid:57)alue(cid:16)(cid:76)n(cid:16)use sl(cid:76)(cid:74)(cid:75)tl(cid:92) a(cid:69)(cid:82)(cid:89)e (cid:70)a(cid:85)(cid:85)(cid:92)(cid:76)n(cid:74) (cid:89)alue
Carr(cid:92)ing value drivers vs market value (R(cid:69)n)
(1.0)
(2.1)
(0.5)
(1)
(cid:57)alue(cid:16)(cid:76)n(cid:16)use
(cid:33) R2.7(cid:69)n
6.3
O(cid:85)(cid:76)(cid:74)(cid:76)nal (cid:70)(cid:82)st (cid:82)(cid:73)
(cid:76)n(cid:89)estment
3.2
(cid:38)a(cid:85)(cid:85)(cid:92)(cid:76)n(cid:74) (cid:89)alue
De(cid:70) 2018
2.7
1.3
4.3
(cid:38)a(cid:85)(cid:85)(cid:92)(cid:76)n(cid:74) (cid:89)alue
De(cid:70) 2019
Ma(cid:85)(cid:78)et (cid:89)alue
De(cid:70) 2019
S(cid:75)a(cid:85)e (cid:82)(cid:73) ETI
NA(cid:57)
Se(cid:83) 2019
Im(cid:83)a(cid:76)(cid:85)ment (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)s(cid:76)(cid:82)n
Ass(cid:82)(cid:70)(cid:76)ate (cid:76)n(cid:70)(cid:82)me(cid:18)(l(cid:82)ss)(cid:15) (cid:41)(cid:38)TR (cid:9) (cid:82)t(cid:75)e(cid:85)
1 (cid:41)C(cid:55)(cid:53) (cid:9) ot(cid:75)er loss o(cid:73)(cid:73)set (cid:69)y (cid:53)(cid:19)(cid:15)(cid:26)(cid:69)n o(cid:73) associate income.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
20
NEDBANK GROUP – ANNUAL RESULTS 2019
3(cid:26)
3(cid:27)
RESULTS
PRESENTATION
Capital – (cid:38)ET1 at t(cid:75)e m(cid:76)(cid:71)(cid:83)(cid:82)(cid:76)nt (cid:82)(cid:73) (cid:82)u(cid:85) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e
CET1 capital ratio (%) – a(cid:73)te(cid:85) (cid:73)ull I(cid:41)RS (cid:76)m(cid:83)lementat(cid:76)(cid:82)n
(1.2)
2.1
(0.2)
(0.7)
(0.2)
(cid:38)ET1 ta(cid:85)(cid:74)et (cid:85)an(cid:74)e(cid:29) 10.5 – 12.5%
11.7
De(cid:70)
2018
SARB m(cid:76)n(cid:76)mum (cid:38)ET1(cid:29) 7.5%
I(cid:41)RS 16
(cid:76)m(cid:83)a(cid:70)t
O(cid:85)(cid:74)an(cid:76)(cid:70)
(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t
D(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71)s
(cid:83)a(cid:76)(cid:71)
R(cid:58)A
(cid:76)n(cid:70)(cid:85)ease
Intan(cid:74)(cid:76)(cid:69)les
11.5
De(cid:70)
2019
11.3
(cid:45)un
2019
NEDBANK GROUP LIMITED – Annual Results 2019
3(cid:28)
NOTES:
Dividend – (cid:90)(cid:76)t(cid:75)(cid:76)n (cid:69)(cid:82)a(cid:85)(cid:71)(cid:16)a(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)e(cid:71) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e(cid:15) su(cid:83)(cid:83)(cid:82)(cid:85)t(cid:76)n(cid:74) a (cid:71)(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71) (cid:92)(cid:76)el(cid:71)
t(cid:75)at (cid:76)s att(cid:85)a(cid:70)t(cid:76)(cid:89)e (cid:73)(cid:82)(cid:85) (cid:76)n(cid:89)est(cid:82)(cid:85)s
Dividend cover (t(cid:76)mes)
Dividend (cid:92)ield (%)
B(cid:82)a(cid:85)(cid:71)(cid:16)a(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)e(cid:71) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e(cid:29)
1.75–2.25(cid:91)
2.06
2.00
1.91
1.97
1.84
Pa(cid:92)(cid:82)ut (cid:85)at(cid:76)(cid:82)(cid:29)
%
9
4
De(cid:70)
2015
%
0
5
De(cid:70)
2016
%
2
5
De(cid:70)
2017
%
1
5
De(cid:70)
2018
%
4
5
De(cid:70)
2019
6.6
3.6
8
7
6
5
4
3
2
1
0
2015
2016
2017
2018
2019
Ne(cid:71)(cid:69)an(cid:78)
All S(cid:75)a(cid:85)e
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)0
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 21
(cid:43)eadline earnings b(cid:92) cluster
(cid:43)eadline earnings (Rm)
Earnings contribution (Rm)
(8%)
(2%)
(8%)
(35%)
(5%)
(3%)
4%
8%
4
1
7
6
7
6
1
6
9
7
3
5
3
9
2
5
3
3
1
1
2
4
0
1
2
0
7
7
5
4
(cid:38)IB
RBB
(cid:58)ealt(cid:75)
A(cid:73)(cid:85)(cid:76)(cid:70)a
Re(cid:74)(cid:76)(cid:82)ns
2018
2019
)
3
3
4
(
)
3
5
4
(
(cid:38)ent(cid:85)e
49%
RBB
A(cid:73)(cid:85)(cid:76)(cid:70)a Re(cid:74)(cid:76)(cid:82)ns
42%
(cid:38)IB
(cid:58)ealt(cid:75)
(cid:38)ent(cid:85)e
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)1
NOTES:
Centre – (cid:78)e(cid:92) (cid:71)(cid:85)(cid:76)(cid:89)e(cid:85)s (cid:76)n(cid:70)lu(cid:71)e (cid:82)n(cid:70)e(cid:16)(cid:82)(cid:73)(cid:73)s
(cid:43)eadline earnings (Rm)
(433)
(453)
26
(72)
75
(96)
187
(140)
2018
(cid:38)ent(cid:85)al
(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)s(cid:76)(cid:82)n
(cid:76)n(cid:70)(cid:85)ease
Net
PRMA
(cid:74)a(cid:76)n
Net
(cid:73)a(cid:76)(cid:85)(cid:16)(cid:89)alue
(cid:74)a(cid:76)ns
(cid:60)ES
(cid:70)(cid:82)sts
Ban(cid:70)(cid:82)
Un(cid:76)(cid:70)(cid:82)
(cid:82)(cid:83)t(cid:76)(cid:82)n
Ot(cid:75)e(cid:85)
2019
▪
▪
▪
▪
(cid:38)ent(cid:85)al (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)s(cid:76)(cid:82)n (cid:76)n(cid:70)(cid:85)ease
(net R100m (cid:83)(cid:85)eta(cid:91)). N(cid:82)ne (cid:76)n
2018.
PRMA (cid:70)(cid:85)e(cid:71)(cid:76)t (cid:82)(cid:73) R354m
(cid:83)(cid:85)eta(cid:91) (cid:76)n (cid:43)1 19 (cid:89)s (cid:43)1 18(cid:29)
R250m (cid:83)(cid:85)eta(cid:91)
(cid:60)ES (cid:70)(cid:82)st (cid:82)(cid:73) R134m (cid:83)(cid:85)eta(cid:91)
(ne(cid:90) (cid:76)n 2019)
Ban(cid:70)(cid:82) Un(cid:76)(cid:70)(cid:82) (cid:82)(cid:83)t(cid:76)(cid:82)n (cid:70)(cid:82)st (cid:82)(cid:73)
R140m (cid:76)n 2019
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)(cid:21)
NOTES:
22
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK CIB
Stable revenues & impairment headwinds
Brian Kennedy
Group Managing Executive
NEDBANK GROUP LIMITED – Annual Results 2019
43
Stable revenues & impairment headwinds
Headline earnings, ROE
Key messages
12 000
10 000
8 000
6 000
4 000
2 000
-
22.6
21.1
20.7
20.0
17.7
(8%)
8
0
2
5
15
4
1
0
6
16
5
1
3
6
17
4
1
7
6
18
7
6
1
6
19
Headline earnings (Rm)
ROE (%)
28.0
23.0
18.0
13.0
8.0
3.0
-2.0
▪ GOI flat: Maintained revenue in a difficult
macroeconomic environment
▪ Advances +7%: Good advances growth but
pressure on margins impacting NII
▪ NIR -4%: Impacted by negative private equity
revaluations & a high 2018 base
▪ CLR at 26 bps (2018: 4 bps): Increased off a
low base but still within target range
▪ Expenses < 1%: Well contained with continued
investment in skills & technology
NEDBANK GROUP LIMITED – Annual Results 2019
44
23
RESULTS PRESENTATIONNOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019
Corporate (cid:9) Investment (cid:37)anking – (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:75)(cid:76)(cid:74)(cid:75)l(cid:76)(cid:74)(cid:75)ts
BOOKLET SLIDE
(cid:60)ear ended
(cid:8) c(cid:75)ange
F(cid:60) (cid:21)01(cid:28)
F(cid:60) (cid:21)01(cid:27)
Ne(cid:71)(cid:69)an(cid:78) (cid:38)IB Ot(cid:75)e(cid:85) (cid:70)luste(cid:85)s
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
G(cid:85)(cid:82)ss (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me (Rm)
PPOP (Rm)
Net (cid:76)nte(cid:85)est ma(cid:85)(cid:74)(cid:76)n (%)
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)ense (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:85)e(cid:71)(cid:76)t l(cid:82)ss (cid:85)at(cid:76)(cid:82) (%)
A(cid:89)e(cid:85)a(cid:74)e (cid:69)an(cid:78)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es (Rm)
A(cid:89)e(cid:85)a(cid:74)e (cid:71)e(cid:83)(cid:82)s(cid:76)ts (Rm)
(cid:43)ea(cid:71)l(cid:76)ne e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm) 1
A(cid:89)e(cid:85)a(cid:74)e all(cid:82)(cid:70)ate(cid:71) (cid:70)a(cid:83)(cid:76)tal (Rm)
ROE (%)
1 (cid:38)(cid:82)st (cid:82)(cid:73) e(cid:84)u(cid:76)t(cid:92) 2018(cid:29) 14.1% (cid:95) 2019(cid:29) 14.1%
NEDBANK GROUP LIMITED – Annual Results 2019
(8)
0
(1)
7
8
(38)
4
NOTES:
(cid:25) 1(cid:25)(cid:26)
1(cid:24) (cid:25)(cid:27)(cid:25)
(cid:27) (cid:28)1(cid:28)
1(cid:17)(cid:28)(cid:28)
1(cid:21)3(cid:17)(cid:27)
(cid:23)(cid:21)(cid:17)1
0(cid:17)(cid:21)(cid:25)
6 714
15 684
9 014
2.12
129.7
41.9
0.04
3(cid:23)(cid:25) (cid:23)(cid:24)(cid:21)
324 384
3(cid:25)(cid:26) (cid:27)0(cid:23)
339 676
51%
1 (cid:21)3(cid:23)
3(cid:23) (cid:27)(cid:27)(cid:24)
1(cid:26)(cid:17)(cid:26)
1 976
33 555
20.0
50%
50%
A(cid:71)(cid:89)an(cid:70)es
49%
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s
NIR do(cid:90)n off a (cid:75)ig(cid:75) base
NIR (Rm)
(cid:46)e(cid:92) drivers
(cid:11)(cid:23)(cid:8)(cid:12)
(cid:27) (cid:24)(cid:21)1
954
(45%)
(cid:27) 1(cid:26)(cid:24)
529
(cid:38)AGR
(cid:14)(cid:25)(cid:8)
(16%)
3 289
(1%)
3 256
(cid:14)8%
4 278
(cid:14)3%
4 390
(cid:14)10%
(cid:25) (cid:24)0(cid:27)
1 068
2 430
3 010
▪ T(cid:85)a(cid:71)(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me (cid:14)3% (cid:71)es(cid:83)(cid:76)te l(cid:82)(cid:90) (cid:89)(cid:82)lat(cid:76)l(cid:76)t(cid:92) (cid:9)
(cid:71)e(cid:70)(cid:85)ease(cid:71) (cid:89)(cid:82)lumes (cid:76)n t(cid:75)e (cid:73)(cid:76)(cid:85)st (cid:75)al(cid:73) (cid:82)(cid:73) 2019
▪ (cid:38)(cid:82)nt(cid:76)nue(cid:71) (cid:76)n(cid:89)estment (cid:76)n ma(cid:85)(cid:78)et(cid:16)lea(cid:71)(cid:76)n(cid:74)
t(cid:85)a(cid:71)(cid:76)n(cid:74) (cid:70)a(cid:83)a(cid:69)(cid:76)l(cid:76)t(cid:76)es a(cid:70)(cid:85)(cid:82)ss t(cid:75)e asset
(cid:70)lasses
▪ (cid:38)(cid:82)mm(cid:76)ss(cid:76)(cid:82)n (cid:9) (cid:73)ees (cid:71)(cid:82)(cid:90)n sl(cid:76)(cid:74)(cid:75)tl(cid:92) –
su(cid:69)(cid:71)ue(cid:71) (cid:70)l(cid:76)ent a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92) (cid:82)(cid:73)(cid:73)set (cid:70)(cid:82)nt(cid:76)nue(cid:71)
(cid:83)(cid:85)(cid:76)ma(cid:85)(cid:92)(cid:16)(cid:70)l(cid:76)ent (cid:90)(cid:76)ns
▪ P(cid:85)(cid:76)(cid:89)ate(cid:16)e(cid:84)u(cid:76)t(cid:92) (cid:76)n(cid:70)(cid:82)me (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92)
ne(cid:74)at(cid:76)(cid:89)e (cid:85)e(cid:89)aluat(cid:76)(cid:82)ns (cid:71)ue t(cid:82) t(cid:75)e (cid:90)ea(cid:78)e(cid:85)
(cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e (cid:82)(cid:73) (cid:70)e(cid:85)ta(cid:76)n (cid:76)n(cid:89)estments
15
18
T(cid:85)a(cid:71)(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me
P(cid:85)(cid:76)(cid:89)ate e(cid:84)u(cid:76)t(cid:92) (cid:9) (cid:82)t(cid:75)e(cid:85)
19
(cid:38)(cid:82)mm(cid:76)ss(cid:76)(cid:82)n (cid:9) (cid:73)ees
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
24
NEDBANK GROUP – ANNUAL RESULTS 2019
(cid:23)(cid:24)
(cid:23)(cid:25)
RESULTS
PRESENTATION
Continuous improvement across all ma(cid:77)or league tables
CI(cid:37) commercial propert(cid:92) market s(cid:75)are
Ma(cid:85)(cid:78)et lea(cid:71)e(cid:85) (cid:33)30%
Rene(cid:90)able(cid:16)energ(cid:92) financing
Ma(cid:85)(cid:78)et lea(cid:71)e(cid:85) (cid:90)(cid:76)t(cid:75) R36(cid:69)n (cid:70)(cid:82)mm(cid:76)tte(cid:71)
(cid:21)01(cid:24)
(cid:21)01(cid:27)
(cid:21)01(cid:28)
DC(cid:48) rankings
Dealmakers (cid:48)(cid:9)(cid:36) advisors
▪ (cid:57)alue
▪ (cid:57)olume (cid:18)(cid:41)lo(cid:90)
Spire a(cid:90)ards
▪ (cid:37)est team (cid:74)o(cid:89)ernment (cid:69)onds
▪ (cid:37)est interest rate deri(cid:89)ati(cid:89)e (cid:75)ouse
▪ (cid:37)est (cid:69)ond (cid:75)ouse
▪ (cid:49)um(cid:69)er o(cid:73) 1st (cid:83)lace a(cid:90)ards
(cid:51)rimar(cid:92)(cid:16)dealer rankings
(cid:51)rimar(cid:92)(cid:16)client (cid:90)ins
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:49)(cid:53)(cid:29) (cid:49)ot ran(cid:78)ed
NOTES:
(cid:6)3
(cid:6)22
(cid:6)12
(cid:6)3
NR
NR
1
(cid:6)4
(cid:6)1
(cid:6)10
(cid:6)2
(cid:6)1
(cid:6)4
(cid:6)3
2
(cid:6)1
(cid:6)1
(cid:6)4
(cid:6)1
(cid:6)1
(cid:6)1
(cid:6)1
6
(cid:6)1
(cid:33)25 (cid:83)e(cid:85) annum
(cid:23)(cid:26)
(cid:50)ngoing primar(cid:92)(cid:16)client (cid:90)ins position CI(cid:37) for revenue uplift
BOOKLET SLIDE
(cid:51)rimar(cid:92)(cid:16)client (cid:90)ins ((cid:6))
Selected primar(cid:92)(cid:16)transactional(cid:16)account (cid:90)ins
3(cid:28)
2
2
10
22
25
15
16
T(cid:76)e(cid:85) 4
T(cid:76)e(cid:85) 3
(cid:21)(cid:25)
3
7
11
5
17
30
2
2
10
16
3(cid:21)
4
8
20
18
19
T(cid:76)e(cid:85) 2
T(cid:76)e(cid:85) 1
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)(cid:27)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 25
Strong advances gro(cid:90)t(cid:75) amid competition for (cid:75)ig(cid:75)(cid:16)(cid:84)ualit(cid:92) assets
(cid:37)anking advances(cid:15) including corporate bonds (R(cid:69)n)
(cid:46)e(cid:92) messages
(cid:14)(cid:28)(cid:8)
3(cid:25)(cid:27)
2
154
3(cid:28)3
4
163
3(cid:24)(cid:28)
4
151
204
211
227
(cid:43)2 18
1
(cid:43)1 19
(cid:43)2 19
Ban(cid:78)(cid:76)n(cid:74)
P(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) (cid:41)(cid:76)nan(cid:70)e
Ot(cid:75)e(cid:85)
33(cid:27)
3
150
186
(cid:43)1 18
▪ (cid:38)(cid:82)n(cid:89)e(cid:85)s(cid:76)(cid:82)n (cid:82)(cid:73) s(cid:76)(cid:74)n(cid:76)(cid:73)(cid:76)(cid:70)ant (cid:71)eals (cid:76)n (cid:43)2 2019
▪ Le(cid:89)e(cid:85)a(cid:74)(cid:76)n(cid:74) lea(cid:71)e(cid:85)s(cid:75)(cid:76)(cid:83) (cid:76)n (cid:38)P(cid:41) (cid:9) ene(cid:85)(cid:74)(cid:92)
(cid:237) (cid:38)(cid:82)nt(cid:76)nue(cid:71) (cid:71)(cid:85)a(cid:90)(cid:71)(cid:82)(cid:90)ns (cid:82)(cid:73) (cid:85)(cid:82)un(cid:71) 4 (cid:85)ene(cid:90)a(cid:69)le(cid:16)
ene(cid:85)(cid:74)(cid:92) (cid:71)eals
(cid:237) Sele(cid:70)t(cid:76)(cid:89)e (cid:82)(cid:85)(cid:76)(cid:74)(cid:76)nat(cid:76)(cid:82)n (cid:76)n P(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) (cid:41)(cid:76)nan(cid:70)e (cid:82)(cid:73)(cid:73)
lea(cid:71)(cid:76)n(cid:74) ma(cid:85)(cid:78)et s(cid:75)a(cid:85)e (cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)n
▪ NII (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92) (cid:70)(cid:82)m(cid:83)et(cid:76)t(cid:76)(cid:89)e (cid:83)(cid:85)(cid:76)(cid:70)(cid:76)n(cid:74)
▪ A(cid:90)a(cid:85)(cid:71)e(cid:71) S(cid:83)(cid:82)ns(cid:82)(cid:85) (cid:82)(cid:73) t(cid:75)e (cid:60)ea(cid:85) (cid:76)n t(cid:75)e P(cid:85)(cid:82)(cid:77)e(cid:70)t
(cid:41)(cid:76)nan(cid:70)e Inte(cid:85)nat(cid:76)(cid:82)nal (P(cid:41)I) A(cid:90)a(cid:85)(cid:71)s (Enel G(cid:85)een
P(cid:82)(cid:90)e(cid:85)) (cid:9) In(cid:73)(cid:85)ast(cid:85)u(cid:70)tu(cid:85)e (cid:9) P(cid:85)(cid:82)(cid:77)e(cid:70)t (cid:41)(cid:76)nan(cid:70)e Deal
(cid:82)(cid:73) t(cid:75)e (cid:60)ea(cid:85) (cid:76)n T(cid:75)e Ban(cid:78)e(cid:85) A(cid:90)a(cid:85)(cid:71)s (Ge(cid:76)ta G(cid:82)l(cid:71)
M(cid:76)ne)
1 (cid:37)an(cid:78)in(cid:74) de(cid:73)ined as In(cid:89)estment (cid:37)an(cid:78)in(cid:74) (cid:9) (cid:58)or(cid:78)in(cid:74) Ca(cid:83)ital com(cid:69)ined.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:23)(cid:28)
NOTES:
Client solutions leading to significant (cid:90)ins
BOOKLET SLIDE
2019
2019
2019
2019
Appointed sole mandated lead
arranger, sole bookrunner, sole
coordinator and sole hedge
coordinator for R10bn debt
refinance
Concluded a bespoke funding
solution with Caterpillar Financial
Services South Africa following their
entrance into the South African
market
CIB was mandated as arranger and
funder to Barloworld’s Kula Sizwe
B-BBEE Share Scheme
Concluded a refinancing of Tsogo
Sun Gaming’s credit facility
2019
2019
2019
2019
Sole arranger and lender of R4bn
credit facility
Joint global coordinator of
R5.5bn credit facility
CIB concluded the inaugural bank
issuance in Africa of green
renewable energy bonds into the
debt capital markets for R2.7bn
Successfully concluded a record
US$5bn international capital market
raise for the Republic of South Africa
in the international Eurobond
market
2019
2019
2019
2019
Successfully concluded a credit
facility positioning us as the largest
funding partner to the group
Successfully concluded a credit
funding in the capacity of sole
funder
Successfully concluded a credit
facility in the capacity of co-
funder
Appointed as co-lead arranger on MBSA’s
Debt Capital Market auctions,
successfully raising R3.6bn in listed bonds
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)0
NOTES:
26
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Coverage (cid:9) impairments increased as t(cid:75)e credit environment
deteriorated in (cid:43)(cid:21) – (cid:84)ual(cid:76)t(cid:92) (cid:82)(cid:73) (cid:69)(cid:82)(cid:82)(cid:78) ma(cid:76)nta(cid:76)ne(cid:71)
(cid:52)ualit(cid:92) of book (cid:9) C(cid:47)R ((cid:69)(cid:83)s)
Stage 3 advances (R(cid:69)n)
0.40%
C(cid:47)R
0.04%
0.26%
4.1
4.1
5.7
Investment
grade
63%
65%
66%
15
18
19
Coverage ratios (%)
24.6
11.6
12.8
0.28
0.37
0.36
15
18
19
De(cid:70) 18
(cid:45)un 19
De(cid:70) 19
Sta(cid:74)e 1 (cid:9) 2
Sta(cid:74)e 3
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)1
NOTES:
Coverage (cid:9) impairments increased as t(cid:75)e credit environment
deteriorated in (cid:43)(cid:21)(cid:29) (cid:52)ualit(cid:92) of book maintained
BOOKLET SLIDE
Top 10 client contribution (%)
CI(cid:37) selected sector e(cid:91)posures (%)
13%
15%
87%
85%
S(cid:83)e(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:76)m(cid:83)a(cid:76)(cid:85)ment
(sta(cid:74)e 3)
Sta(cid:74)e 3
(cid:71)e(cid:73)aults
10 la(cid:85)(cid:74)est e(cid:91)(cid:83)(cid:82)su(cid:85)es
Ot(cid:75)e(cid:85)
(cid:38)P(cid:41)
28%
Ot(cid:75)e(cid:85)
72%
State O(cid:90)ne(cid:71)
Ent(cid:76)t(cid:76)es
3.5%
3.4%
Reta(cid:76)le(cid:85)s
M(cid:76)n(cid:76)n(cid:74)
2.5%
1.9%
4.4%
4.3%
S(cid:75)a(cid:85)e Base(cid:71)
De(cid:69)t
4.8%
3.3%
(cid:38)(cid:82)nst(cid:85)u(cid:70)t(cid:76)(cid:82)n
1.3%
1.3%
P(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) (cid:41)(cid:76)nan(cid:70)e
41.3%
40.1%
18 19
M(cid:76)(cid:74)(cid:85)at(cid:76)(cid:82)n
(cid:85)(cid:76)s(cid:78)
D(cid:82)(cid:90)ns(cid:76)(cid:71)e
(cid:85)(cid:76)s(cid:78)
(cid:38)(cid:75)an(cid:74)e –
M(cid:76)(cid:74)(cid:85)at(cid:76)(cid:82)n
R(cid:76)s(cid:78)
(cid:38)(cid:75)an(cid:74)e –
D(cid:82)(cid:90)ns(cid:76)(cid:71)e
R(cid:76)s(cid:78)
(cid:48)
(cid:43)
(cid:48)
(cid:48)
(cid:48)
(cid:48)
(cid:47)
(cid:48)
(cid:48)
(cid:48)
(cid:47)
(cid:48)
(cid:378)
(cid:16)
(cid:16)
(cid:378)
(cid:16)
(cid:16)
(cid:378)
(cid:376)
(cid:376)
(cid:376)
(cid:16)
(cid:376)
(cid:378)
(cid:62) (cid:64) R(cid:76)s(cid:78) (cid:71)e(cid:70)(cid:85)ease (cid:62) (cid:64) N(cid:82) (cid:70)(cid:75)an(cid:74)e (cid:62) (cid:64) R(cid:76)s(cid:78) (cid:76)n(cid:70)(cid:85)ease
(cid:376)
(cid:16)
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)(cid:21)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 27
(cid:52)ualit(cid:92) commercial propert(cid:92) book
BOOKLET SLIDE
C(cid:47)R ((cid:69)(cid:83)s)(cid:15) (cid:47)T(cid:57)s (%)
(cid:46)e(cid:92) drivers
C(cid:47)R
8
4
(5)
10
(2)
▪ St(cid:85)(cid:82)n(cid:74) (cid:70)l(cid:76)ent (cid:69)ase su(cid:83)(cid:83)(cid:82)(cid:85)te(cid:71) (cid:69)(cid:92) an e(cid:91)(cid:83)e(cid:85)(cid:76)en(cid:70)e(cid:71) team
▪ A(cid:90)a(cid:85)(cid:71)e(cid:71) T(cid:82)(cid:83) A(cid:73)(cid:85)(cid:76)(cid:70)an Real(cid:16)Estate Ban(cid:78) (API A(cid:90)a(cid:85)(cid:71)s)
(cid:47)T(cid:57)
47%
45%
42%
44%
▪ (cid:58)ell(cid:16)(cid:71)(cid:76)(cid:89)e(cid:85)s(cid:76)(cid:73)(cid:76)e(cid:71) (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82) (cid:9) (cid:90)e(cid:76)(cid:74)(cid:75)te(cid:71) t(cid:82) t(cid:75)e (cid:70)(cid:82)(cid:85)(cid:85)e(cid:70)t se(cid:74)ments (cid:76)n t(cid:75)e ma(cid:85)(cid:78)et
48%
▪ (cid:38)LR (cid:69)el(cid:82)(cid:90) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e (cid:82)(cid:73) 15 (cid:69)(cid:83)s t(cid:82) 35 (cid:69)(cid:83)s
▪ L(cid:82)(cid:90) (cid:74)ea(cid:85)(cid:76)n(cid:74) (cid:16) a(cid:71)e(cid:84)uate (cid:70)(cid:82)llate(cid:85)al(cid:76)sat(cid:76)(cid:82)n s(cid:76)(cid:74)n(cid:76)(cid:73)(cid:76)(cid:70)antl(cid:92) (cid:85)e(cid:71)u(cid:70)es (cid:83)(cid:82)tent(cid:76)al
l(cid:82)sses
▪ P(cid:85)(cid:76)ma(cid:85)(cid:92) len(cid:71)(cid:76)n(cid:74) (cid:82)(cid:83)e(cid:85)at(cid:76)(cid:82)n su(cid:83)(cid:83)lemente(cid:71) (cid:69)(cid:92) (cid:83)(cid:85)(cid:76)(cid:89)ate(cid:16)e(cid:84)u(cid:76)t(cid:92) a(cid:85)m
▪ (cid:57)aluat(cid:76)(cid:82)ns a(cid:85)e u(cid:83)(cid:71)ate(cid:71) (cid:82)n an (cid:82)n(cid:74)(cid:82)(cid:76)n(cid:74) (cid:69)as(cid:76)s(cid:15) (cid:83)(cid:85)e(cid:71)(cid:82)m(cid:76)nantl(cid:92) (cid:69)(cid:92) (cid:82)u(cid:85) (cid:76)nte(cid:85)nal
15
16
17
18
19
(cid:89)alue(cid:85)s(cid:15) (cid:90)(cid:76)t(cid:75) a (cid:83)(cid:82)(cid:85)t(cid:76)(cid:82)n (cid:82)uts(cid:82)u(cid:85)(cid:70)e(cid:71) t(cid:82) e(cid:91)te(cid:85)nal (cid:89)alue(cid:85)s
▪ Sta(cid:74)e 2 (cid:9) 3 (cid:70)l(cid:76)ents (cid:89)alue(cid:71) e(cid:89)e(cid:85)(cid:92) 6 m(cid:82)nt(cid:75)s
(cid:36)verage (cid:47)T(cid:57) b(cid:92) sector (%) (cid:9) propert(cid:92) t(cid:92)pe (%)
(cid:51)ortfolio vie(cid:90)
(cid:47)T(cid:57)
48
56
52
52
38
37
34
▪ 82% (cid:70)(cid:82)n(cid:70)ent(cid:85)ate(cid:71) t(cid:82) t(cid:75)e (cid:70)(cid:82)(cid:85)e se(cid:74)ments (cid:82)(cid:73) (cid:82)(cid:73)(cid:73)(cid:76)(cid:70)e(cid:15) (cid:85)eta(cid:76)l (cid:9) (cid:76)n(cid:71)ust(cid:85)(cid:76)al ((cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74)
mult(cid:76)(cid:83)le (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82))
▪ 10% (cid:85)elates t(cid:82) (cid:85)es(cid:76)(cid:71)ent(cid:76)al(cid:15) (cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74) (cid:70)as(cid:75)(cid:73)l(cid:82)(cid:90) (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)(cid:76)n(cid:74) (cid:85)ental st(cid:82)(cid:70)(cid:78) (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82)
▪ (cid:57)a(cid:70)ant lan(cid:71) (cid:31) 2% (cid:82)(cid:73) t(cid:75)e (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82)
▪ LT(cid:57)s (cid:33) 90% am(cid:82)unt t(cid:82) 1% (cid:82)(cid:73) t(cid:75)e (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82) (cid:9) 83% (cid:82)(cid:73) t(cid:75)e (cid:69)(cid:82)(cid:82)(cid:78) (cid:76)s (cid:69)el(cid:82)(cid:90) 70%
SECT(cid:50)R
(cid:8)
26%
25%
18%
13%
10%
2%
6%
LT(cid:57) (cid:69)ase(cid:71) (cid:82)n Ne(cid:71)(cid:69)an(cid:78)(cid:182)s (cid:76)nte(cid:85)nal (cid:89)aluat(cid:76)(cid:82)ns
▪ A(cid:89)e(cid:85)a(cid:74)e LT(cid:57)s (cid:85)e(cid:73)le(cid:70)t (cid:85)(cid:76)s(cid:78) a(cid:83)(cid:83)et(cid:76)te a(cid:70)(cid:85)(cid:82)ss se(cid:70)t(cid:82)(cid:85)s – l(cid:82)(cid:90)e(cid:85) LT(cid:57)s (cid:82)n (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85)(cid:16)(cid:85)(cid:76)s(cid:78)
Reta(cid:76)l
O(cid:73)(cid:73)(cid:76)(cid:70)es
In(cid:71)ust(cid:85)(cid:76)al Mult(cid:76)(cid:83)le
(cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82)
Res(cid:76)(cid:71)ent(cid:76)al (cid:57)a(cid:70)ant
Ot(cid:75)e(cid:85)
lan(cid:71)
se(cid:70)t(cid:82)(cid:85)s
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)3
NOTES:
Commercial propert(cid:92) sector insig(cid:75)ts
BOOKLET SLIDE
(cid:50)ffice space – (cid:82)(cid:89)e(cid:85)su(cid:83)(cid:83)l(cid:76)e(cid:71)
Retail sector – la(cid:85)(cid:74)el(cid:92) (cid:82)(cid:89)e(cid:85)su(cid:83)(cid:83)l(cid:76)e(cid:71) (cid:76)n met(cid:85)(cid:82)s
▪ O(cid:73)(cid:73)(cid:76)(cid:70)e (cid:89)a(cid:70)an(cid:70)(cid:76)es (cid:85)ema(cid:76)n (cid:75)(cid:76)(cid:74)(cid:75) (cid:69)ut sta(cid:69)le at 11.0% a(cid:70)(cid:85)(cid:82)ss t(cid:75)e
(cid:69)(cid:82)a(cid:85)(cid:71)
▪
▪
▪
▪
Rentals (cid:85)ema(cid:76)n un(cid:71)e(cid:85) (cid:83)(cid:85)essu(cid:85)e (cid:90)(cid:76)t(cid:75) ne(cid:74)at(cid:76)(cid:89)e (cid:85)e(cid:89)e(cid:85)s(cid:76)(cid:82)ns
(cid:70)(cid:82)mm(cid:82)n
T(cid:75)e (cid:38)(cid:16)(cid:74)(cid:85)a(cid:71)e se(cid:74)ment (cid:75)a(cid:71) la(cid:85)(cid:74)est (cid:76)m(cid:83)(cid:85)(cid:82)(cid:89)ement (cid:76)n (cid:89)a(cid:70)an(cid:70)(cid:76)es
(cid:71)ue t(cid:82) (cid:85)es(cid:76)(cid:71)ent(cid:76)al (cid:70)(cid:82)n(cid:89)e(cid:85)s(cid:76)(cid:82)ns
De(cid:89)el(cid:82)(cid:83)ment a(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92) (cid:76)s at a 13(cid:16)(cid:92)ea(cid:85) l(cid:82)(cid:90). De(cid:89)el(cid:82)(cid:83)e(cid:85)s (cid:82)(cid:83)t(cid:76)n(cid:74)
(cid:73)(cid:82)(cid:85) tenant(cid:16)(cid:71)(cid:85)(cid:76)(cid:89)en a(cid:83)(cid:83)(cid:85)(cid:82)a(cid:70)(cid:75) (cid:69)e(cid:73)(cid:82)(cid:85)e (cid:70)(cid:82)mm(cid:76)tt(cid:76)n(cid:74) (cid:70)a(cid:83)(cid:76)tal
61% (cid:82)(cid:73) ne(cid:90) (cid:71)e(cid:89)el(cid:82)(cid:83)ment (cid:70)(cid:82)n(cid:70)ent(cid:85)ate(cid:71) (cid:76)n San(cid:71)t(cid:82)n(cid:15)
R(cid:82)se(cid:69)an(cid:78)(cid:15) (cid:58)ate(cid:85)(cid:73)all (cid:9) Menl(cid:92)n
▪
▪
▪
▪
Reta(cid:76)l (cid:89)a(cid:70)an(cid:70)(cid:76)es (cid:70)u(cid:85)(cid:85)entl(cid:92) at 4.4%(cid:15) a(cid:69)(cid:82)(cid:89)e t(cid:75)e l(cid:82)n(cid:74)(cid:16)te(cid:85)m
a(cid:89)e(cid:85)a(cid:74)e (cid:82)(cid:73) 2.9%
Rentals (cid:85)ema(cid:76)n un(cid:71)e(cid:85) (cid:83)(cid:85)essu(cid:85)e (cid:90)(cid:76)t(cid:75) ne(cid:74)at(cid:76)(cid:89)e (cid:85)e(cid:89)e(cid:85)s(cid:76)(cid:82)ns
(cid:70)(cid:82)mm(cid:82)n as lan(cid:71)l(cid:82)(cid:85)(cid:71)s l(cid:82)(cid:82)(cid:78) t(cid:82) (cid:83)(cid:85)(cid:82)te(cid:70)t (cid:89)a(cid:70)an(cid:70)(cid:76)es. Reta(cid:76)le(cid:85)s(cid:182)
(cid:70)(cid:82)st (cid:82)(cid:73) (cid:82)(cid:70)(cid:70)u(cid:83)an(cid:70)(cid:92) (cid:82)n an u(cid:83)(cid:90)a(cid:85)(cid:71) t(cid:85)en(cid:71)
Reta(cid:76)l l(cid:76)(cid:78)el(cid:92) t(cid:82) (cid:85)ema(cid:76)n un(cid:71)e(cid:85) (cid:83)(cid:85)essu(cid:85)e (cid:71)ue t(cid:82) (cid:71)(cid:76)(cid:73)(cid:73)(cid:76)(cid:70)ult
e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:70)(cid:82)n(cid:71)(cid:76)t(cid:76)(cid:82)ns (cid:9) (cid:70)(cid:82)nsume(cid:85) s(cid:83)en(cid:71)(cid:76)n(cid:74) (cid:70)(cid:82)nst(cid:85)a(cid:76)nts
(cid:57)a(cid:70)an(cid:70)(cid:76)es (cid:76)n su(cid:83)e(cid:85) (cid:85)e(cid:74)(cid:76)(cid:82)nal (cid:70)ent(cid:85)es ((cid:33)100 000 s(cid:84)m) at 4.7%
(cid:70)(cid:82)m(cid:83)a(cid:85)e(cid:71) t(cid:82) ne(cid:76)(cid:74)(cid:75)(cid:69)(cid:82)u(cid:85)(cid:75)(cid:82)(cid:82)(cid:71) (cid:9) small (cid:85)e(cid:74)(cid:76)(cid:82)nals at 5.5% an(cid:71)
4.9% (cid:85)es(cid:83)e(cid:70)t(cid:76)(cid:89)el(cid:92)
Industrial sector – (cid:85)es(cid:76)l(cid:76)ent
Residential – (cid:70)aut(cid:76)(cid:82)us
▪
▪
▪
In(cid:71)ust(cid:85)(cid:76)al (cid:89)a(cid:70)an(cid:70)(cid:92) (cid:70)u(cid:85)(cid:85)entl(cid:92) at 3.4% a(cid:70)(cid:85)(cid:82)ss t(cid:75)e (cid:69)(cid:82)a(cid:85)(cid:71) (cid:9) (cid:76)s
l(cid:82)(cid:90)e(cid:85) t(cid:75)an (cid:85)eta(cid:76)l (cid:9) (cid:82)(cid:73)(cid:73)(cid:76)(cid:70)e se(cid:70)t(cid:82)(cid:85) (cid:89)a(cid:70)an(cid:70)(cid:76)es
Rental (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:82)(cid:73) 5.3% (cid:76)n (cid:43)1 2019(cid:15) (cid:69)ut l(cid:82)(cid:90)e(cid:85) (cid:70)a(cid:83)(cid:76)tal (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
at 2.4%
In(cid:71)ust(cid:85)(cid:76)al (cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) (cid:73)un(cid:71)amentals (cid:75)a(cid:89)e (cid:69)ene(cid:73)(cid:76)tte(cid:71) (cid:73)(cid:85)(cid:82)m
(cid:85)elat(cid:76)(cid:89)el(cid:92) (cid:70)(cid:82)nst(cid:85)a(cid:76)ne(cid:71) su(cid:83)(cid:83)l(cid:92) (cid:9) sta(cid:69)le (cid:70)a(cid:83)a(cid:70)(cid:76)t(cid:92) ut(cid:76)l(cid:76)sat(cid:76)(cid:82)n
▪
▪
▪
St(cid:85)(cid:82)n(cid:74) (cid:71)eman(cid:71) (cid:73)(cid:82)(cid:85) (cid:85)es(cid:76)(cid:71)ent(cid:76)al (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)t (cid:76)n l(cid:82)(cid:90)e(cid:85) (cid:83)(cid:85)(cid:76)(cid:70)e (cid:69)(cid:85)a(cid:70)(cid:78)ets
– (cid:83)u(cid:85)(cid:70)(cid:75)ase (cid:83)(cid:85)(cid:76)(cid:70)e (cid:69)el(cid:82)(cid:90) R1m (cid:9) m(cid:82)nt(cid:75)l(cid:92) (cid:85)ental un(cid:71)e(cid:85) R8 500
A(cid:73)(cid:73)(cid:82)(cid:85)(cid:71)a(cid:69)le (cid:85)ental st(cid:82)(cid:70)(cid:78) ma(cid:85)(cid:78)et (cid:69)u(cid:82)(cid:92)ant (cid:76)n t(cid:75)e (cid:70)u(cid:85)(cid:85)ent ma(cid:85)(cid:78)et
De(cid:89)el(cid:82)(cid:83)e(cid:85)s (cid:76)n (cid:74)ene(cid:85)al a(cid:85)e (cid:70)aut(cid:76)(cid:82)us (cid:76)n t(cid:75)e (cid:70)u(cid:85)(cid:85)ent e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70)
en(cid:89)(cid:76)(cid:85)(cid:82)nment
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)(cid:23)
NOTES:
28
NEDBANK GROUP – ANNUAL RESULTS 2019
Prospects for CIB
A powerful wholesale business highly focused on its clients
Financial targets1
Leverage strengths
ROE
Markets
Best-in-class
teams
Property
Finance
Market
leader
Investment
Banking
Transactional
Services
Strong advisory &
sector expertise
Disruptive thinking
& technology
solutions
▪ Medium term:
≥ 18%
▪ Long term:
≥ 20%
Strategic focus
Cost-to-income
Client
Centricity
Sustainability
Transformation &
optimisation
Africa
▪ Medium term:
≤ 42%
▪ Long term:
≤ 40 %
1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years.
NEDBANK GROUP LIMITED – Annual Results 2019
55
NEDBANK RBB
Strong growth in pre-provisioning operating
profit offset by higher impairments
Ciko Thomas
Group Managing Executive
NEDBANK GROUP LIMITED – Annual Results 2019
56
29
RESULTS PRESENTATIONNOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 Strong gro(cid:90)t(cid:75) in pre(cid:16)provisioning operating profit offset b(cid:92)
(cid:75)ig(cid:75)er impairments
(cid:43)eadline earnings(cid:15) R(cid:50)E
(cid:46)e(cid:92) messages
7 000
6 500
6 000
5 500
5 000
4 500
4 000
3 500
3 000
18.9
19.1
18.9
16.6
17.3
(2%)
0
6
4
4
15
0
6
9
4
16
2
0
3
5
17
9
7
3
5
18
3
(cid:28)
(cid:21)
(cid:24)
19
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
ROE (%)
20.0
15.0
10.0
5.0
(cid:16)
▪ PPOP (cid:14)11%
(cid:237) NII (cid:14)6%(cid:29) s(cid:82)l(cid:76)(cid:71) a(cid:71)(cid:89)an(cid:70)es (cid:9) (cid:71)e(cid:83)(cid:82)s(cid:76)t (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:237) NIR (cid:14)6%(cid:29) (cid:71)(cid:85)(cid:76)(cid:89)en (cid:69)(cid:92) (cid:76)n(cid:73)lat(cid:76)(cid:82)na(cid:85)(cid:92) (cid:83)(cid:85)(cid:76)(cid:70)(cid:76)n(cid:74)
(cid:76)n(cid:70)(cid:85)eases (cid:9) (cid:89)(cid:82)lume(cid:16)(cid:85)elate(cid:71) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:237) E(cid:91)(cid:83)enses (cid:14)2%(cid:29) (cid:69)ene(cid:73)(cid:76)t (cid:73)(cid:85)(cid:82)m (cid:82)(cid:83)t(cid:76)m(cid:76)s(cid:76)n(cid:74)
(cid:83)(cid:85)(cid:82)(cid:70)esses (cid:9) (cid:82)(cid:83)e(cid:85)at(cid:76)(cid:82)ns
(cid:237) (cid:38)LR at 138 (cid:69)(cid:83)s ((cid:14)32 (cid:69)(cid:83)s)(cid:29) (cid:76)m(cid:83)a(cid:76)(cid:85)ments
(cid:76)n(cid:70)(cid:85)ease(cid:71) (cid:70)(cid:92)(cid:70)l(cid:76)(cid:70)all(cid:92) (cid:82)(cid:73)(cid:73) a l(cid:82)(cid:90) (cid:69)ase (cid:90)(cid:76)t(cid:75)
(cid:90)(cid:82)(cid:85)sen(cid:76)n(cid:74) ma(cid:70)(cid:85)(cid:82)en(cid:89)(cid:76)(cid:85)(cid:82)nment (cid:76)n t(cid:75)e (cid:73)(cid:82)u(cid:85)t(cid:75)
(cid:84)ua(cid:85)te(cid:85)
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)(cid:26)
Retail (cid:9) (cid:37)usiness (cid:37)anking – (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:75)(cid:76)(cid:74)(cid:75)l(cid:76)(cid:74)(cid:75)ts
BOOKLET SLIDE
(cid:60)ear ended
(cid:8) c(cid:75)ange
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
G(cid:85)(cid:82)ss (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me (Rm)
PPOP (Rm)
Net (cid:76)nte(cid:85)est ma(cid:85)(cid:74)(cid:76)n (%)
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)ense (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:85)e(cid:71)(cid:76)t l(cid:82)ss (cid:85)at(cid:76)(cid:82) (%)
A(cid:89)e(cid:85)a(cid:74)e (cid:69)an(cid:78)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es (Rm)
A(cid:89)e(cid:85)a(cid:74)e (cid:71)e(cid:83)(cid:82)s(cid:76)ts (Rm)
(cid:43)ea(cid:71)l(cid:76)ne e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm)1
A(cid:89)e(cid:85)a(cid:74)e all(cid:82)(cid:70)ate(cid:71) (cid:70)a(cid:83)(cid:76)tal (Rm)
ROE (%)
1 Cost o(cid:73) equity 1(cid:27)(cid:29) 1(cid:23).1(cid:8) | 1(cid:28)(cid:29) 1(cid:23).1(cid:8).
NEDBANK GROUP LIMITED – Annual Results 2019
(2)
6
11
7
8
(29)
7
(cid:21)01(cid:28)
(cid:24) (cid:21)(cid:28)3
33 1(cid:23)(cid:28)
1(cid:21) 1(cid:26)(cid:24)
(cid:24)(cid:17)(cid:25)(cid:26)
(cid:25)(cid:24)(cid:17)3
(cid:25)1(cid:17)(cid:24)
1(cid:17)3(cid:27)
(cid:21)01(cid:27)
5 379
31 283
10 926
5.69
62.9
64.0
1.06
33(cid:24) 101
312 119
3(cid:21)(cid:27) (cid:21)(cid:26)(cid:21)
305 151
(cid:28)(cid:25)(cid:26)
1 359
30 (cid:24)(cid:26)3
28 471
1(cid:26)(cid:17)3
18.9
Ne(cid:71)(cid:69)an(cid:78) RBB Ot(cid:75)e(cid:85) (cid:70)luste(cid:85)s
A(cid:71)(cid:89)an(cid:70)es
44%
42%
56%
58%
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s
(cid:24)(cid:27)
NOTES:
NOTES:
30
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Consumer (cid:37)anking – (cid:43)E (cid:71)(cid:82)(cid:90)n as (cid:76)m(cid:83)a(cid:76)(cid:85)ments n(cid:82)(cid:85)mal(cid:76)se(cid:71)(cid:15) (cid:69)ut (cid:90)ell
(cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)ne(cid:71) (cid:73)(cid:82)(cid:85) (cid:73)utu(cid:85)e (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:36)dvances (R(cid:69)n)
17
18
19
Income statement drivers
(cid:46)e(cid:92) messages
(cid:14)(cid:24)(cid:8)
(cid:43)E (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
3.3%
▪ (cid:52)ualit(cid:92) business (cid:90)ell
(cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)ne(cid:71) (cid:73)(cid:82)(cid:85) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:14)(cid:21)(cid:8)
67
66
59
217
203 208
Asset (cid:83)a(cid:92)(cid:82)uts
A(cid:89)e(cid:85)a(cid:74)e Balan(cid:70)es
PPOP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
12.8%
▪ Strong gro(cid:90)t(cid:75) in (cid:51)(cid:51)(cid:50)(cid:51) (cid:9) an
NIR (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
4.7%
Financial ratios
ROE
(cid:38)LR
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)enses
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me
14.4%
1.95%
61.7%
60.3%
(cid:76)m(cid:83)(cid:85)(cid:82)(cid:89)ement (cid:76)n (cid:70)(cid:82)st(cid:16)t(cid:82)(cid:16)
(cid:76)n(cid:70)(cid:82)me (cid:85)at(cid:76)(cid:82)
▪ Gro(cid:90)t(cid:75) in impairments off a
lo(cid:90) base mute(cid:71) (cid:43)E (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
▪ (cid:48)ost improved (cid:82)(cid:73) SA(cid:182)s (cid:73)(cid:76)(cid:89)e
(cid:85)eta(cid:76)l (cid:69)an(cid:78)s (cid:82)n t(cid:75)(cid:85)ee (cid:71)(cid:76)(cid:73)(cid:73)e(cid:85)ent
measu(cid:85)es (cid:82)(cid:73) client
e(cid:91)perience
▪ (cid:41)(cid:82)(cid:70)us (cid:76)s t(cid:82) (cid:69)e e(cid:89)en m(cid:82)(cid:85)e
client(cid:16)centred(cid:15) (cid:9) (cid:71)el(cid:76)(cid:89)e(cid:85)
e(cid:89)en better client
e(cid:91)periences.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)(cid:28)
(cid:37)usiness (cid:37)anking (cid:90)ell positioned for gro(cid:90)t(cid:75)
(cid:36)dvances (R(cid:69)n)
Income statement drivers
(cid:46)e(cid:92) messages
17
18
19
(cid:14)13(cid:8)
26.6
23.6
(cid:14)11(cid:8)
74.7
67.6
62.5
20.3
(cid:43)E (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)1
PPOP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
A(cid:89)e (cid:71)e(cid:83)(cid:82)s(cid:76)t (cid:69)alan(cid:70)e
NIR (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
Financial ratios
ROE
(cid:38)LR
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)enses
Asset (cid:83)a(cid:92)(cid:82)uts
A(cid:89)e(cid:85)a(cid:74)e (cid:69)alan(cid:70)es
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me
▪ (cid:52)ualit(cid:92) business (cid:90)ell
(cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)ne(cid:71) (cid:73)(cid:82)(cid:85) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
▪ Client groups increased t(cid:82)
14 700
▪ Favourable N(cid:51)S score (cid:82)(cid:73)
45.1% (u(cid:83) 2.7% (cid:92)(cid:82)(cid:92))
▪ Good momentum e(cid:89)(cid:76)(cid:71)en(cid:70)e(cid:71)
a(cid:70)(cid:85)(cid:82)ss assets (cid:9) l(cid:76)a(cid:69)(cid:76)l(cid:76)t(cid:76)es
▪ Stea(cid:71)(cid:76)l(cid:92) improving brand
a(cid:90)areness (cid:9) consideration
(cid:69)(cid:92) t(cid:75)e ma(cid:85)(cid:78)et
0.4%
14.0%
9.0%
8.8%
18.3%
52 (cid:69)(cid:83)s
51.5%
61.9%
(cid:40)(cid:91)cludes internal client mi(cid:74)rations (cid:69)et(cid:90)een di(cid:89)isions | 1 (cid:43)(cid:40) (cid:16)(cid:24).(cid:23)(cid:8) includin(cid:74) mi(cid:74)rations.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)0
NOTES:
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 31
Retail Relations(cid:75)ip (cid:37)anking consistentl(cid:92) delivering a profitable performance
(cid:36)dvances (R(cid:69)n)
17
18
19
(cid:14)11(cid:8)
39.1
35.1
32.5
(cid:14)(cid:28)(cid:8)
9.6
8.8
6.9
Income statement drivers
(cid:46)e(cid:92) messages
(cid:43)E (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)1
PPOP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
NIR (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
Financial ratios
ROE
(cid:38)LR
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)enses
▪ (cid:52)ualit(cid:92) business (cid:76)n a (cid:85)es(cid:76)l(cid:76)ent
se(cid:70)t(cid:82)(cid:85) (cid:82)(cid:73) t(cid:75)e e(cid:70)(cid:82)n(cid:82)m(cid:92)
▪ Good momentum e(cid:89)(cid:76)(cid:71)en(cid:70)e(cid:71)
a(cid:70)(cid:85)(cid:82)ss all l(cid:76)nes – t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal(cid:15)
assets (cid:9) l(cid:76)a(cid:69)(cid:76)l(cid:76)t(cid:76)es
▪ Stea(cid:71)(cid:76)l(cid:92) (cid:76)m(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)n(cid:74) client
metrics (cid:9) market perception
28.8%
32.9%
9.5%
31.7%
32 (cid:69)(cid:83)s
57.4%
63.8%
Asset (cid:83)a(cid:92)(cid:82)uts
A(cid:89)e(cid:85)a(cid:74)e (cid:69)alan(cid:70)es
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me
(cid:40)(cid:91)cludes internal client mi(cid:74)rations (cid:69)et(cid:90)een di(cid:89)isions | 1 (cid:43)(cid:40) (cid:14)(cid:23)(cid:19).2(cid:8) includin(cid:74) mi(cid:74)rations.
* (cid:53)(cid:53)(cid:37) core e(cid:91)cludes internal mi(cid:74)rations
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
Good gro(cid:90)t(cid:75) in advances (cid:9) deposits
BOOKLET SLIDE
(cid:36)verage banking advances (R(cid:69)n)
(cid:36)verage deposits (R(cid:69)n)
17
18
19
(cid:26)(cid:17)(cid:23)(cid:8)
5
3
3
(cid:14)(cid:26)(cid:17)1(cid:8)
2
1
3
5
9
2
5
6
0
7
5
7
(cid:14)(cid:26)(cid:17)(cid:26)(cid:8)
(cid:14)(cid:24)(cid:17)(cid:27)(cid:8)
3(cid:17)(cid:24)(cid:8)
(cid:26)(cid:17)(cid:25)(cid:8)
(cid:14)1(cid:26)(cid:17)1(cid:8)
9
1
2
7
0
2
7
9
1
8
5 8
3 8
8
4
8
8
1 9
9
3
3
5
3
1
4
(cid:14)(cid:24)(cid:17)(cid:28)(cid:8)
(cid:14)(cid:26)(cid:17)1(cid:8)
6
1
7
1
8
1
4
1
4
1
5
1
8
2
3
5
0
3
2
8
2
RBB
t(cid:82)tal
Bus(cid:76)ness
Ban(cid:78)(cid:76)n(cid:74)
Relat(cid:76)(cid:82)ns(cid:75)(cid:76)(cid:83)
Ban(cid:78)(cid:76)n(cid:74)
(cid:38)(cid:82)nsume(cid:85)
Ban(cid:78)(cid:76)n(cid:74) (cid:9)
(cid:82)t(cid:75)e(cid:85)
(cid:42)ra(cid:83)(cid:75)s not dra(cid:90)n to scale (cid:9) do not include (cid:37)(cid:37)(cid:18) (cid:53)(cid:53)(cid:37) restructure.
(cid:51)roduct lines e(cid:91)clude (cid:53)(cid:53)(cid:37) (cid:9) (cid:37)(cid:37).
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
(cid:43)(cid:82)me
l(cid:82)ans
(cid:57)e(cid:75)(cid:76)(cid:70)le
(cid:73)(cid:76)nan(cid:70)e
Pe(cid:85)s(cid:82)nal
l(cid:82)ans
(cid:38)a(cid:85)(cid:71)
De(cid:83)(cid:82)s(cid:76)ts
32
NEDBANK GROUP – ANNUAL RESULTS 2019
(cid:25)1
(cid:25)(cid:21)
RESULTS
PRESENTATION
Impairments – (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:74)(cid:76)(cid:89)en t(cid:75)e (cid:76)m(cid:83)a(cid:70)t (cid:82)(cid:73) t(cid:75)e ma(cid:70)(cid:85)(cid:82)e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) en(cid:89)(cid:76)(cid:85)(cid:82)nment
Impats (R m)
Credit loss ratio ((cid:69)(cid:83)s)
(cid:46)e(cid:92) messages
PL
Ot(cid:75)e(cid:85)
BB
M(cid:41)(cid:38)
(cid:43)L
1.06
1.06
1.38
180
130
Ta(cid:85)(cid:74)et
(cid:85)an(cid:74)e
C(cid:47)R increased b(cid:92) 3(cid:21) bps(cid:29)
▪ (cid:58)(cid:76)t(cid:75)(cid:76)n t(cid:75)e 130 (cid:69)(cid:83)s t(cid:82) 180 (cid:69)(cid:83)s
TT(cid:38) ta(cid:85)(cid:74)et (cid:85)an(cid:74)e
▪ (cid:38)(cid:92)(cid:70)l(cid:76)(cid:70)al (cid:76)n(cid:70)(cid:85)ease (cid:82)(cid:73)(cid:73) a l(cid:82)(cid:90) (cid:69)ase
▪ R(cid:76)s(cid:78) n(cid:82)(cid:85)mal(cid:76)se(cid:71)(cid:15) (cid:71)(cid:85)(cid:76)(cid:89)en la(cid:85)(cid:74)el(cid:92) (cid:69)(cid:92)
(cid:71)ete(cid:85)(cid:76)(cid:82)(cid:85)at(cid:76)n(cid:74) ma(cid:70)(cid:85)(cid:82)e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70)
en(cid:89)(cid:76)(cid:85)(cid:82)nment
▪ M(cid:41)(cid:38) (cid:76)n(cid:70)(cid:85)ease (cid:71)ue t(cid:82) (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85) le(cid:89)els
(cid:82)(cid:73) (cid:85)e(cid:83)(cid:82)ssess(cid:76)(cid:82)ns (cid:9) (cid:90)(cid:85)(cid:76)te(cid:82)(cid:73)(cid:73)s
▪ BB (cid:76)n(cid:70)(cid:85)ease (cid:74)(cid:76)(cid:89)en (cid:70)(cid:82)nt(cid:76)nue(cid:71)
(cid:76)m(cid:83)a(cid:70)t (cid:82)(cid:73) l(cid:82)(cid:90) (cid:69)us(cid:76)ness (cid:70)(cid:82)n(cid:73)(cid:76)(cid:71)en(cid:70)e
▪ Re(cid:74)ulat(cid:82)(cid:85)(cid:92) (cid:76)m(cid:83)a(cid:70)ts (cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74)
set(cid:82)(cid:73)(cid:73) t(cid:85)eatment
2017
2018
2019
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)3
Retail transactional NIR gro(cid:90)t(cid:75) a(cid:75)ead of client gro(cid:90)t(cid:75) – (cid:71)ee(cid:83)e(cid:85)
(cid:70)l(cid:76)ent (cid:83)enet(cid:85)at(cid:76)(cid:82)n
Total retail client base ((cid:6)000)
Retail NIR (Rm)
Total
Reta(cid:76)l(cid:15) e(cid:91)(cid:70)l
ma(cid:76)n(cid:16)
(cid:69)an(cid:78)e(cid:71)
Ma(cid:76)n(cid:16)
(cid:69)an(cid:78)e(cid:71)
(cid:14)0.1%
(0.3%)
(cid:26) (cid:24)3(cid:27)
(cid:26) (cid:24)(cid:23)3
(cid:26) (cid:24)(cid:21)3
4 755
4 567
4 578
(cid:14)6.9%
(1.0%)
2 783
2 976
17
18
2 945
1
19
Total
Ot(cid:75)e(cid:85)
T(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal
(cid:9) (cid:70)(cid:82)nsume(cid:85)
(cid:70)a(cid:85)(cid:71) (cid:76)ssu(cid:76)n(cid:74)
(cid:14)1.8%
(cid:14)6.1%
10 (cid:24)3(cid:26)
3 572
10 (cid:26)(cid:21)(cid:24)
3 507
11 3(cid:27)(cid:23)
3 714
(cid:14)3.6%
(cid:14)6.3%
6 965
7 218
7 670
17
18
19
1 (cid:39)eclines in acquisition (cid:90)ere (cid:69)alanced out (cid:69)y im(cid:83)ro(cid:89)ements in attrition.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)(cid:23)
NEDBANK GROUP – ANNUAL RESULTS 2019 33
NOTES:
NOTES:
Client(cid:16)centred strateg(cid:92) intact – st(cid:85)(cid:82)n(cid:74) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) a(cid:70)(cid:85)(cid:82)ss m(cid:82)st se(cid:74)ments
(cid:48)ain(cid:16)banked(cid:15) (cid:6) 000
(cid:75)
t
u
(cid:82)
(cid:92)
(cid:9)
s
(cid:71)
K
(cid:76)
l
e
(cid:89)
e
l
(cid:92)
(cid:85)
t
n
E
l
e
(cid:71)
(cid:71)
M
(cid:76)
(cid:11)3(cid:8)(cid:12)
(cid:11)10(cid:8)(cid:12)
382
372
336
(cid:14)(cid:27)(cid:8)
(cid:11)(cid:21)(cid:8)(cid:12)
1 411
1 525
1 495
(cid:14)(cid:28)(cid:8)
(cid:14)1(cid:8)
797
872
884
17
18
19
l
a
n
(cid:82)
s
s
e
(cid:76)
(cid:73)
(cid:82)
(cid:85)
P
s
s
e
n
s
u
B
(cid:76)
l
l
a
m
S
s
s
e
n
s
u
B
(cid:76)
(cid:15)
3
2
s
e
(cid:70)
(cid:89)
(cid:85)
e
S
(cid:76)
(cid:15)
(cid:76)
3
1
(cid:74)
n
(cid:78)
n
a
B
(cid:14)10(cid:8)
(cid:14)(cid:28)(cid:8)
70
77
84
(cid:14)(cid:25)(cid:8)
(cid:14)(cid:25)(cid:8)
116
123
130
(cid:14)(cid:21)(cid:8)
(cid:14)(cid:21)(cid:8)
21.1
21.5
22.0
17
18
19
1 Client (cid:74)rou(cid:83)s (cid:90)it(cid:75) (cid:74)ross o(cid:83)eratin(cid:74) income contri(cid:69)utions in e(cid:91)cess o(cid:73) (cid:53)(cid:24)(cid:19)(cid:19) (cid:83)m. | 2 2(cid:19)1(cid:26) (cid:90)as re(cid:69)ased (cid:73)or mi(cid:74)ration o(cid:73) t(cid:75)e (cid:42)rey (cid:51)ort(cid:73)olio (cid:73)rom (cid:37)(cid:37) to (cid:54)(cid:37)(cid:54) on 1 (cid:45)une 2(cid:19)1(cid:27).
(cid:22). 2(cid:19)1(cid:28) re(cid:73)lects a li(cid:78)e(cid:16)(cid:73)or(cid:16)li(cid:78)e com(cid:83)arison (cid:83)rior to mo(cid:89)e o(cid:73) (cid:26)(cid:78) client (cid:74)rou(cid:83)s (cid:73)rom (cid:37)(cid:37) to (cid:53)(cid:53)(cid:37) (cid:11)resultin(cid:74) in (cid:28)(cid:78) additional main(cid:69)an(cid:78)ed(cid:12). (cid:51)ost mo(cid:89)e actuals are 1(cid:23).(cid:26)(cid:78) and 1(cid:22)(cid:28)(cid:78) (cid:73)or (cid:37)(cid:37)
(cid:9) (cid:53)(cid:53)(cid:37) res(cid:83)ecti(cid:89)ely | (cid:49)ote(cid:29) (cid:49)on(cid:16)resident(cid:15) non(cid:16)indi(cid:89)idual se(cid:74)ment not s(cid:75)o(cid:90)n.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)(cid:24)
NOTES:
Nedbank Retail (cid:9) (cid:37)usiness (cid:37)anking – (cid:69)u(cid:76)l(cid:71)(cid:76)n(cid:74) m(cid:82)(cid:85)e en(cid:71)u(cid:85)(cid:76)n(cid:74)
(cid:70)l(cid:76)ent (cid:85)elat(cid:76)(cid:82)ns(cid:75)(cid:76)(cid:83)s t(cid:75)(cid:85)(cid:82)u(cid:74)(cid:75) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)t (cid:70)(cid:85)(cid:82)ss(cid:16)sell
BOOKLET SLIDE
Total retail clients1
(cid:8) (cid:92)o(cid:92) gro(cid:90)t(cid:75)
Number of product line clients (cid:90)it(cid:75)
transactional products(cid:15) (cid:6)000
(cid:8) (cid:92)o(cid:92) gro(cid:90)t(cid:75)
(cid:6) 000
18
19
Investments
Card
(cid:51)ersonal loans
(cid:48)FC
((cid:89)e(cid:75)(cid:76)(cid:70)le (cid:73)(cid:76)nan(cid:70)e)
(cid:43)ome loans
Transactional
products
1 570
1 501
1 024
1 048
5 974
5 946
451
453
589
603
296
295
(cid:11)(cid:23)(cid:15)(cid:23)(cid:12)
(cid:14)(cid:21)(cid:15)3
(cid:14)0(cid:15)(cid:23)
(cid:14)(cid:21)(cid:17)(cid:23)
(cid:11)0(cid:15)3(cid:12)
(cid:11)0(cid:15)(cid:24)(cid:12)
1(cid:15)086
69%
608
59%
257
57%
142
24%
118
40%
1(cid:15)000
67%
633
60%
273
60%
151
25%
122
41%
Transactional clients (cid:90)it(cid:75) product line
1(cid:15)650
28%
18
1(cid:15)615
27%
19
(cid:11)(cid:26)(cid:15)(cid:28)(cid:12)
(cid:14)(cid:23)(cid:15)1
(cid:14)(cid:25)(cid:15)(cid:21)
(cid:14)(cid:25)(cid:15)3
(cid:14)3(cid:15)(cid:23)
(cid:11)(cid:21)(cid:15)1(cid:12)
(cid:25)(cid:25)
1 (cid:55)ransactional declines in acquisition (cid:90)ere (cid:69)alanced out (cid:69)y im(cid:83)ro(cid:89)ements in attrition
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
34
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Nedbank Retail (cid:9) (cid:37)usiness (cid:37)anking – NIR (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) su(cid:83)(cid:83)(cid:82)(cid:85)te(cid:71) (cid:69)(cid:92)
(cid:74)(cid:82)(cid:82)(cid:71) (cid:89)(cid:82)lume (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)(cid:15) (cid:69)ut mute(cid:71) (cid:69)(cid:92) st(cid:85)ate(cid:74)(cid:76)(cid:70) (cid:70)(cid:75)(cid:82)(cid:76)(cid:70)es (cid:9) (cid:82)t(cid:75)e(cid:85) (cid:73)a(cid:70)t(cid:82)(cid:85)s
BOOKLET SLIDE
NIR gro(cid:90)t(cid:75) (Rm)
14
28
43
233
0
89
323
15
312
1
(cid:38)a(cid:85)(cid:71)
164
T(cid:85)ans(cid:16)
a(cid:70)t(cid:76)(cid:82)nal
Se(cid:70)u(cid:85)e(cid:71)
len(cid:71)(cid:76)n(cid:74)
2
P(cid:85)(cid:76)(cid:70)e
(cid:76)n(cid:70)(cid:85)eases
M(cid:76)(cid:91)
Pe(cid:85)s(cid:82)nal
l(cid:82)ans
(cid:57)(cid:82)lume(cid:16)(cid:85)elate(cid:71)
(cid:21)01(cid:27) NIR gro(cid:90)t(cid:75) (Rm)
727
A(cid:70)t(cid:76)(cid:89)(cid:76)t(cid:92) (cid:38)a(cid:85)(cid:71) ma(cid:85)(cid:74)(cid:76)n
I(cid:41)RS Ot(cid:75)e(cid:85) (cid:60)O(cid:60) NIR
4
5
(cid:9) (cid:83)(cid:85)(cid:82)(cid:71) m(cid:76)(cid:91)
(cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:14)160
(cid:14)517
(cid:14)73
3
(cid:14)288
(4)
(cid:14)1
(cid:14)111
(300)
(582)
(cid:14)14
(cid:14)278
1 (cid:42)ro(cid:90)t(cid:75) (cid:83)redominantly dri(cid:89)en (cid:69)y t(cid:75)e acquisition and (cid:89)olume (cid:74)ro(cid:90)t(cid:75) o(cid:73) (cid:78)ey acce(cid:83)tance clients
2 Includes a(cid:89)era(cid:74)e (cid:83)rice increase o(cid:73) (cid:23).(cid:24)(cid:8) im(cid:83)lemented on 1 (cid:45)anuary 2(cid:19)1(cid:28).
(cid:22) Includes a(cid:89)era(cid:74)e (cid:83)rice increase o(cid:73) (cid:24).(cid:22)(cid:8) im(cid:83)lemented on 1 (cid:45)anuary 2(cid:19)1(cid:27).
(cid:23) (cid:48)ar(cid:74)in reduction dri(cid:89)en (cid:69)y a c(cid:75)an(cid:74)es in customer transactin(cid:74) (cid:69)e(cid:75)a(cid:89)iour as (cid:90)ell as industry (cid:73)orces
(cid:24) Includes 2(cid:19)1(cid:27) s(cid:90)a(cid:83) (cid:83)ro(cid:73)its in (cid:48)(cid:41)C and timin(cid:74) di(cid:73)(cid:73)erence on re(cid:89)ie(cid:90) (cid:73)ees in (cid:37)(cid:37).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)(cid:26)
Strong results in t(cid:75)e annual Consulta S(cid:36)(cid:16)csi results (cid:9) (cid:37)randse(cid:92)e
social media surve(cid:92)
In(cid:71)ust(cid:85)(cid:92)
Ne(cid:71)(cid:69)an(cid:78)
(cid:38)(cid:82)m(cid:83)et(cid:76)t(cid:82)(cid:85)s
Net (cid:51)romoter Score (cid:6)3
S(cid:36)(cid:16)csi (cid:6)(cid:21)
26.1%
37.1%
38.1%
79.3
80.2
76.3
4
7
4
1
4
4
5
1
2017
2018
2019
2017
2018
2019
Social (cid:48)edia Sentiment (cid:6)1
(cid:43)ome (cid:47)oans S(cid:36)(cid:16)csi (cid:6)1
(5.8%)
(7.7%)
20.4%
70.2
74.7
74.3
2017
2018
2019
2017
2018
2019
SA(cid:16)(cid:70)s(cid:76) (cid:32) S(cid:82)ut(cid:75) A(cid:73)(cid:85)(cid:76)(cid:70)an (cid:38)ust(cid:82)me(cid:85) Sat(cid:76)s(cid:73)a(cid:70)t(cid:76)(cid:82)n In(cid:71)e(cid:91) (cid:9) NPS (cid:32) Net P(cid:85)(cid:82)m(cid:82)te(cid:85) S(cid:70)(cid:82)(cid:85)e
S(cid:82)u(cid:85)(cid:70)e(cid:29) SA(cid:16)(cid:70)s(cid:76) an(cid:71) NPS a(cid:85)e measu(cid:85)e(cid:71) annuall(cid:92) as (cid:83)a(cid:85)t (cid:82)(cid:73) (cid:38)(cid:82)nsulta(cid:182)s Ban(cid:78)(cid:76)n(cid:74) In(cid:71)ust(cid:85)(cid:92) SA(cid:16)(cid:70)s(cid:76) su(cid:85)(cid:89)e(cid:92) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75) (cid:75)as (cid:69)een (cid:85)unn(cid:76)n(cid:74) s(cid:76)n(cid:70)e 2012. T(cid:75)e 2019 sam(cid:83)le s(cid:76)(cid:93)e (cid:73)(cid:82)(cid:85) Ne(cid:71)(cid:69)an(cid:78) (cid:90)as 3 015(cid:15)
(cid:70)(cid:82)ns(cid:76)st(cid:76)n(cid:74) (cid:82)n a (cid:70)(cid:82)m(cid:69)(cid:76)nat(cid:76)(cid:82)n (cid:82)(cid:73) tele(cid:83)(cid:75)(cid:82)n(cid:76)(cid:70) an(cid:71) (cid:90)e(cid:69)(cid:16)(cid:69)ase(cid:71) su(cid:85)(cid:89)e(cid:92)s. Sam(cid:83)l(cid:76)n(cid:74) (cid:90)as (cid:71)(cid:82)ne (cid:82)n a (cid:70)(cid:75)annel(cid:15) (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)t an(cid:71) se(cid:74)ment le(cid:89)el (t(cid:75)e sam(cid:83)le s(cid:76)(cid:93)e (cid:73)(cid:82)(cid:85) (cid:43)(cid:82)me L(cid:82)ans (cid:90)as 334).
S(cid:82)(cid:70)(cid:76)al Me(cid:71)(cid:76)a Sent(cid:76)ment (cid:76)s measu(cid:85)e(cid:71) (cid:69)(cid:92) B(cid:85)an(cid:71)sE(cid:92)e(cid:182)s. B(cid:85)an(cid:71)sE(cid:92)e(cid:10)s 2019 Ban(cid:78)(cid:76)n(cid:74) Sent(cid:76)ment In(cid:71)e(cid:91)(cid:15) anal(cid:92)se(cid:71) 1.9 m(cid:76)ll(cid:76)(cid:82)n s(cid:82)(cid:70)(cid:76)al me(cid:71)(cid:76)a (cid:83)(cid:82)sts a(cid:69)(cid:82)ut S(cid:82)ut(cid:75) A(cid:73)(cid:85)(cid:76)(cid:70)a(cid:182)s la(cid:85)(cid:74)est (cid:69)an(cid:78)s an(cid:71) (cid:76)n(cid:70)lu(cid:71)e(cid:71)
an anal(cid:92)s(cid:76)s (cid:82)(cid:73) 68 500 (cid:83)(cid:82)sts a(cid:69)(cid:82)ut t(cid:75)e ne(cid:90) ent(cid:85)ants(cid:15) Ban(cid:78) (cid:61)e(cid:85)(cid:82)(cid:15) D(cid:76)s(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92) Ban(cid:78) (cid:9) T(cid:92)me.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)(cid:27)
NOTES:
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 35
(cid:43)ig(cid:75)lig(cid:75)ts of client innovations in R(cid:37)(cid:37)
Digital onboarding
(cid:43)omebu(cid:92)ing (cid:77)ourne(cid:92)
(cid:47)ending (cid:36)(cid:51)I
Greenbacks programme
Seamless onboarding for clients
Digital (cid:75)omebu(cid:92)ing e(cid:91)perience
Disruptive (cid:9) inclusive lending
(cid:48)one(cid:92) management programme
▪ S(cid:76)m(cid:83)le t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal
a(cid:70)(cid:70)(cid:82)unt (cid:82)(cid:83)en(cid:76)n(cid:74) laun(cid:70)(cid:75)e(cid:71)
(cid:82)n t(cid:75)e sel(cid:73)(cid:16)se(cid:85)(cid:89)(cid:76)(cid:70)e (cid:78)(cid:76)(cid:82)s(cid:78)
▪ Ena(cid:69)le(cid:71) small (cid:69)us(cid:76)nesses
t(cid:82) (cid:82)(cid:83)en a t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal
a(cid:70)(cid:70)(cid:82)unt en(cid:71)(cid:16)t(cid:82)(cid:16)en(cid:71) (cid:82)n
ne(cid:71)(cid:69)an(cid:78).(cid:70)(cid:82).(cid:93)a
▪ A(cid:70)(cid:70)ess t(cid:82) (cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) sea(cid:85)(cid:70)(cid:75)(cid:15)
(cid:83)(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) (cid:85)e(cid:83)(cid:82)(cid:85)ts an(cid:71) (cid:70)(cid:85)e(cid:71)(cid:76)t
(cid:83)(cid:85)ea(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)als (cid:82)n a(cid:83)(cid:83)
▪ S(cid:76)m(cid:83)l(cid:76)(cid:73)(cid:76)e(cid:71)(cid:15) (cid:70)(cid:75)at (cid:69)ase(cid:71)
(cid:75)(cid:82)me l(cid:82)an a(cid:83)(cid:83)l(cid:76)(cid:70)at(cid:76)(cid:82)n –
a(cid:71)(cid:71)(cid:76)t(cid:76)(cid:82)nal (cid:71)(cid:76)(cid:74)(cid:76)tal sales
(cid:70)(cid:75)annel
▪ A(cid:70)(cid:70)ess (cid:70)(cid:85)e(cid:71)(cid:76)t t(cid:82) (cid:73)(cid:76)nan(cid:70)e
t(cid:85)ansa(cid:70)t(cid:76)(cid:82)ns (cid:82)n me(cid:85)(cid:70)(cid:75)ants(cid:182)
s(cid:76)tes (cid:76)n un(cid:71)e(cid:85) 5 m(cid:76)nutes
▪ Ne(cid:90) G(cid:85)een(cid:69)a(cid:70)(cid:78)s m(cid:82)ne(cid:92)
mana(cid:74)ement (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)amme
laun(cid:70)(cid:75)e(cid:71)
▪ 1st (cid:76)n A(cid:73)(cid:85)(cid:76)(cid:70)a t(cid:82) al(cid:76)(cid:74)n t(cid:82)
▪ In(cid:70)ent(cid:76)(cid:89)(cid:76)s(cid:76)n(cid:74) (cid:9) (cid:85)e(cid:90)a(cid:85)(cid:71)(cid:76)n(cid:74)
O(cid:83)en Ban(cid:78)(cid:76)n(cid:74) stan(cid:71)a(cid:85)(cid:71)s
t(cid:75)(cid:85)(cid:82)u(cid:74)(cid:75) API (cid:83)lat(cid:73)(cid:82)(cid:85)m
(cid:71)es(cid:76)(cid:85)e(cid:71) (cid:69)e(cid:75)a(cid:89)(cid:76)(cid:82)u(cid:85)s(cid:15)
en(cid:70)(cid:82)u(cid:85)a(cid:74)e(cid:71) t(cid:75)(cid:85)(cid:82)u(cid:74)(cid:75)
(cid:83)(cid:85)(cid:82)m(cid:83)ts (cid:9) nu(cid:71)(cid:74)es
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:25)(cid:28)
(cid:36)ccelerated digitisation of tec(cid:75)nolog(cid:92) (cid:9) operations
Digitall(cid:92) enabled clients
((cid:6) 000)
Digitall(cid:92) active clients
((cid:6) 000)
Self(cid:16)service cas(cid:75) deposit
volumes (%)
(cid:14)3(cid:8)
1
1
9
5
18
4
8
7
5
17
(cid:14)(cid:24)(cid:8)
5
8
1
6
19
(cid:14)1(cid:24)(cid:8)
(cid:14)10(cid:8)
4
4
4
4
5
5
1
1
18
4
4
7
7
4
4
1
1
17
7
7
7
1
19
(cid:14)(cid:21)(cid:23)(cid:8)
61
61
18
73
73
19
48
48
17
(cid:48)one(cid:92) app active users
((cid:6) 000)
(cid:48)obile app t(cid:75)ird(cid:16)part(cid:92)
pa(cid:92)ments (cid:9) transfers (R(cid:69)n)
Digital vas1 NIR
(Rm)
(cid:14)(cid:27)(cid:24)(cid:8)
(cid:14)(cid:27)(cid:21)(cid:8)
0
17
450
18
832
19
6
2
17
0
5
18
1
9
19
(cid:14)3(cid:25)(cid:8)
194
(cid:14)(cid:21)(cid:28)(cid:8)
250
18
19
134
17
1 (cid:57)alue(cid:16)added ser(cid:89)ices (cid:11)electricity(cid:15) data(cid:15) airtime(cid:15) instant (cid:83)ayments(cid:15) etc(cid:12).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:26)0
NOTES:
NOTES:
36
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
(cid:50)ptimisation of processes (cid:9) operations
Total R(cid:37)(cid:37) emplo(cid:92)ees
((cid:6))
(cid:37)ranc(cid:75) floor space saved
((cid:181)000 m2)1
Number of retail outlets
((cid:6))
(cid:16)(cid:26)(cid:8)
5
4
5
9
1
18
3
4
2
0
2
17
(cid:16)10(cid:8)
9
6
6
7
1
19
Teller activit(cid:92)
((cid:6) 000)2
36 860
30 911
0
6
8
6
3
17
1
1
9
0
3
18
23 343
3
4
3
3
2
19
24
17
33
18
42
19
613
17
604
18
589
19
Cumulative robotics process
automation ((cid:6))
Cumulative efficiencies
(Rm)3
1
17
48
18
125
19
4
4
4
17
7
1
0
1
18
7
0
5
1
19
1 (cid:53)e(cid:83)resents t(cid:75)e total (cid:69)ranc(cid:75) (cid:73)loor s(cid:83)ace (cid:90)e sa(cid:89)ed since 2(cid:19)1(cid:23) (cid:90)it(cid:75) a tar(cid:74)et o(cid:73) (cid:33) (cid:23)(cid:28) (cid:19)(cid:19)(cid:19)m2 equatin(cid:74) to a(cid:83)(cid:83)ro(cid:91)imately 2(cid:22)(cid:8) o(cid:73) our (cid:69)ranc(cid:75) (cid:73)loor s(cid:83)ace in 2(cid:19)1(cid:23) (cid:90)(cid:75)en (cid:90)e started
t(cid:75)e (cid:77)ourney. (cid:95) 2 (cid:53)e(cid:73)ers to t(cid:75)e (cid:89)olumes o(cid:73) interactions. | (cid:22) 2(cid:19)1(cid:28) includes (cid:53)1(cid:69)n o(cid:73) (cid:55)(cid:50)(cid:48)(cid:16)related e(cid:73)(cid:73)iciencies.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:26)1
NOTES:
(cid:51)rospects for R(cid:37)(cid:37)
(cid:37)uilding sustainable(cid:15) profitable businesses t(cid:75)roug(cid:75) t(cid:75)e c(cid:92)cle
Financial targets1
(cid:47)everage strengt(cid:75)s
R(cid:50)E
Consumer
(cid:70)l(cid:76)ent(cid:16)(cid:70)ent(cid:85)e(cid:71) m(cid:82)(cid:71)el
(cid:71)el(cid:76)(cid:89)e(cid:85)(cid:76)n(cid:74) ma(cid:85)(cid:78)et(cid:16)lea(cid:71)(cid:76)n(cid:74)
e(cid:91)(cid:83)e(cid:85)(cid:76)en(cid:70)es
Retail Relations(cid:75)ip
(cid:37)anking
(cid:83)e(cid:85)s(cid:82)nal(cid:76)se(cid:71)(cid:15) (cid:73)le(cid:91)(cid:76)(cid:69)le
(cid:9) (cid:83)(cid:85)(cid:82)a(cid:70)t(cid:76)(cid:89)e a(cid:83)(cid:83)(cid:85)(cid:82)a(cid:70)(cid:75)
(cid:37)usiness (cid:37)anking
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29)
(cid:149) 1(cid:28)(cid:8)
a(cid:70)(cid:70)(cid:82)unta(cid:69)le(cid:15)
em(cid:83)(cid:82)(cid:90)e(cid:85)e(cid:71)(cid:15) (cid:71)e(cid:70)ent(cid:85)al(cid:76)se(cid:71)
(cid:69)us(cid:76)ness se(cid:85)(cid:89)(cid:76)(cid:70)e m(cid:82)(cid:71)el
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29)
(cid:149) (cid:21)0(cid:8)
Strategic focus
Cost(cid:16)to(cid:16)income
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29)
(cid:148) (cid:24)(cid:28)(cid:8)
D(cid:76)(cid:74)(cid:76)tal (cid:41)(cid:76)(cid:85)st(cid:15)
(cid:41)(cid:76)(cid:85)st (cid:76)n D(cid:76)(cid:74)(cid:76)tal
D(cid:76)s(cid:85)u(cid:83)t(cid:76)(cid:89)e
(cid:38)(cid:57)Ps
Sales (cid:9) se(cid:85)(cid:89)(cid:76)(cid:70)e
e(cid:91)(cid:70)ellen(cid:70)e
L(cid:82)(cid:92)alt(cid:92) (cid:9)
(cid:85)e(cid:90)a(cid:85)(cid:71)s
Data anal(cid:92)t(cid:76)(cid:70)s
(cid:9) BI
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29)
(cid:148) (cid:24)(cid:26)(cid:8)
1 (cid:48)edium(cid:16)term de(cid:73)ined as 2 to (cid:22) years. (cid:47)on(cid:74)(cid:16)term de(cid:73)ined as (cid:24)(cid:14) years.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:26)(cid:21)
NOTES:
NEDBANK GROUP – ANNUAL RESULTS 2019 37
NEDBANK WEALTH
Earnings adversely impacted by revenue
pressure
Iolanda Ruggiero
Group Managing Executive
NEDBANK GROUP LIMITED – Annual Results 2019
73
Earnings adversely impacted by revenue pressure
Headline earnings, ROE1
Key messages
41.5
35.2
27.5
26.8
24.8
(8%)
4
3
1
1
15
2
9
1
1
16
8
6
0
1
17
3
3
1
1
18
2
4
0
1
19
Headline Earnings
ROE (%)
2001
1501
1001
501
1
42.0
37.0
32.0
27.0
22.0
17.0
12.0
7.0
2.0
-3.0
▪ Headline earnings -8%
− NII +3%: steady international deposit growth
offset by a decline in US interest rates
− NIR -1.4%: lower brokerage, portfolio & asset
management fees & higher non-life claims
ratio
− Expenses +3%: below inflationary growth
− CLR at 18 bps (+5 bps): increase in
impairments off a low base with worsening
macro environment in the fourth quarter
1 During 2016, the group changed its capital allocation methodology. The ROE for 2015 would have been 36.7% using the updated methodology.
NEDBANK GROUP LIMITED – Annual Results 2019
74
38
NOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
Earnings adversel(cid:92) impacted b(cid:92) revenue pressure
BOOKLET SLIDE
(cid:43)eadline earnings per division (Rm)
(cid:46)e(cid:92) drivers
(14.4%)
(5.4%)
(6.1%)
5
9
2
(cid:21)
(cid:24)
(cid:21)
7
3
3
(cid:28)
1
3
1
0
5
1
(cid:26)
(cid:23)
(cid:58)ealt(cid:75) Mana(cid:74)ement Asset Mana(cid:74)ement
Insu(cid:85)an(cid:70)e
18
19
(cid:58)ealt(cid:75) (cid:48)anagement
▪ P(cid:82)(cid:82)(cid:85) l(cid:82)(cid:70)al ma(cid:85)(cid:78)et (cid:70)(cid:82)n(cid:71)(cid:76)t(cid:76)(cid:82)ns
▪ Stea(cid:71)(cid:92) (cid:76)nte(cid:85)nat(cid:76)(cid:82)nal (cid:71)e(cid:83)(cid:82)s(cid:76)t (cid:9) AUM
▪ De(cid:70)l(cid:76)n(cid:76)n(cid:74) US (cid:76)nte(cid:85)est (cid:85)ates
(cid:36)sset (cid:48)anagement
▪ St(cid:85)(cid:82)n(cid:74) net (cid:76)n(cid:73)l(cid:82)(cid:90)s
▪ S(cid:75)(cid:76)(cid:73)t t(cid:82) l(cid:82)(cid:90)e(cid:85)(cid:16)ma(cid:85)(cid:74)(cid:76)n (cid:73)(cid:76)(cid:91)e(cid:71) (cid:76)n(cid:70)(cid:82)me (cid:9) (cid:83)ass(cid:76)(cid:89)e
asset (cid:70)lasses
▪ (cid:38)(cid:82)nt(cid:76)nue(cid:71) (cid:83)(cid:85)essu(cid:85)e (cid:82)n ma(cid:85)(cid:74)(cid:76)ns
Insurance
▪ G(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n l(cid:76)(cid:73)e (cid:57)NB
▪ (cid:43)(cid:76)(cid:74)(cid:75)e(cid:85) n(cid:82)n(cid:16)l(cid:76)(cid:73)e (cid:70)la(cid:76)ms
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:26)(cid:24)
(cid:58)ealt(cid:75) – (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:75)(cid:76)(cid:74)(cid:75)l(cid:76)(cid:74)(cid:75)ts
BOOKLET SLIDE
(cid:60)ear ended
(cid:8) c(cid:75)ange
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
G(cid:85)(cid:82)ss (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me (Rm)
PPOP (Rm)
Net (cid:76)nte(cid:85)est ma(cid:85)(cid:74)(cid:76)n (%)
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)ense (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me (cid:85)at(cid:76)(cid:82) (%)
(cid:38)LR (%)
Assets un(cid:71)e(cid:85) mana(cid:74)ement (Rm)
L(cid:76)(cid:73)e em(cid:69)e(cid:71)(cid:71)e(cid:71) (cid:89)alue (Rm)
L(cid:76)(cid:73)e (cid:89)alue (cid:82)(cid:73) ne(cid:90) (cid:69)us(cid:76)ness (Rm)
(cid:43)ea(cid:71)l(cid:76)ne e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm)1
A(cid:89)e(cid:85)a(cid:74)e all(cid:82)(cid:70)ate(cid:71) (cid:70)a(cid:83)(cid:76)tal (Rm)
ROE (%)
1 Cost o(cid:73) equity 1(cid:27)(cid:29) 1(cid:23).1(cid:8) | 1(cid:28)(cid:29) 1(cid:23).1(cid:8).
NEDBANK GROUP LIMITED – Annual Results 2019
(8)
(0)
(8)
(cid:21)01(cid:28)
1 0(cid:23)(cid:21)
(cid:23) (cid:24)(cid:27)(cid:23)
1 3(cid:24)(cid:26)
(cid:21)(cid:17)1(cid:26)
110(cid:17)(cid:23)
(cid:25)(cid:26)(cid:17)(cid:28)
0(cid:17)1(cid:27)
(cid:21)01(cid:27)
1 133
(cid:23) (cid:24)(cid:28)(cid:26)
1 (cid:23)(cid:26)(cid:26)
(cid:21)(cid:17)31
11(cid:24)(cid:17)(cid:26)
(cid:25)(cid:24)(cid:17)(cid:24)
0(cid:17)13
11
14
11
(17)
331 3(cid:25)1
(cid:21)(cid:28)(cid:26) 33(cid:27)
3 1(cid:27)(cid:27)
(cid:21) (cid:26)(cid:27)(cid:25)
(cid:23)(cid:21)1
(cid:23)(cid:23)(cid:26)
(cid:23) (cid:21)0(cid:23)
(cid:21)(cid:23)(cid:17)(cid:27)
3(cid:27)0
(cid:24)3(cid:25)
(cid:23) (cid:21)(cid:21)(cid:24)
(cid:21)(cid:25)(cid:17)(cid:27)
(cid:58)ealt(cid:75)
Ot(cid:75)e(cid:85) (cid:70)luste(cid:85)s
8%
92%
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s
▪ Net (cid:76)n(cid:73)l(cid:82)(cid:90)s
▪ L(cid:76)(cid:73)e APE
▪ N(cid:82)n(cid:16)l(cid:76)(cid:73)e G(cid:58)P
R1(cid:24)bn
(cid:11)1(cid:17)(cid:21)(cid:8)(cid:12)
0(cid:17)(cid:24)(cid:8)
(cid:26)(cid:25)
NEDBANK GROUP – ANNUAL RESULTS 2019 39
NOTES:
NOTES:
(cid:58)ealt(cid:75) (cid:48)anagement – st(cid:85)(cid:82)n(cid:74) (cid:76)nte(cid:85)nat(cid:76)(cid:82)nal (cid:70)l(cid:76)ent (cid:73)l(cid:82)(cid:90)s
(cid:47)iabilities (cid:9) advances
L(cid:76)a(cid:69)(cid:76)l(cid:76)t(cid:76)es
A(cid:71)(cid:89)an(cid:70)es
(cid:46)e(cid:92) drivers
International
(1.2%)
▪ St(cid:85)(cid:82)n(cid:74) AUM (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
15
16
17
18
(cid:58)ealt(cid:75) (cid:48)anagement International
%
4
.
1
(cid:14)
19
SA (cid:70)l(cid:76)ent (cid:73)l(cid:82)(cid:90)s
SA (cid:70)l(cid:76)ents %
33%
▪ G(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n len(cid:71)(cid:76)n(cid:74) (cid:69)alan(cid:70)es ne(cid:74)at(cid:76)(cid:89)el(cid:92) (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92)
B(cid:85)e(cid:91)(cid:76)t un(cid:70)e(cid:85)ta(cid:76)nt(cid:92) (cid:9) (cid:73)(cid:76)e(cid:85)(cid:70)e (cid:70)(cid:82)m(cid:83)et(cid:76)t(cid:76)(cid:82)n (cid:73)(cid:85)(cid:82)m (cid:85)(cid:76)n(cid:74)(cid:16)
(cid:73)en(cid:70)e(cid:71) (cid:69)an(cid:78)s
▪ Stea(cid:71)(cid:92) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n (cid:71)e(cid:83)(cid:82)s(cid:76)ts
(cid:47)ocal
▪ Ne(cid:74)at(cid:76)(cid:89)e (cid:76)n(cid:89)est(cid:82)(cid:85) (cid:70)(cid:82)n(cid:73)(cid:76)(cid:71)en(cid:70)e (cid:76)m(cid:83)a(cid:70)t(cid:76)n(cid:74) (cid:69)(cid:85)(cid:82)(cid:78)e(cid:85)a(cid:74)e
(cid:9) (cid:83)lanne(cid:85) (cid:70)(cid:82)mm(cid:76)ss(cid:76)(cid:82)ns
▪ (cid:43)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:76)m(cid:83)a(cid:76)(cid:85)ments (cid:82)(cid:73)(cid:73) a l(cid:82)(cid:90) (cid:69)ase
15
16
17
18
NEDBANK GROUP LIMITED – Annual Results 2019
%
6
1
19
NOTES:
(cid:36)sset (cid:48)anagement – st(cid:85)(cid:82)n(cid:74) ma(cid:85)(cid:78)et s(cid:75)a(cid:85)e (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n (cid:70)as(cid:75) (cid:9) (cid:83)ass(cid:76)(cid:89)e
(cid:36)ssets under management (R(cid:69)n)
(cid:46)e(cid:92) drivers
L(cid:82)(cid:70)al
Inte(cid:85)nat(cid:76)(cid:82)nal
(cid:14)11%
▪ St(cid:85)(cid:82)n(cid:74) net (cid:76)n(cid:73)l(cid:82)(cid:90)s (cid:9) ma(cid:85)(cid:78)et s(cid:75)a(cid:85)e (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
▪ (cid:38)(cid:75)an(cid:74)e (cid:76)n m(cid:76)(cid:91) as (cid:76)n(cid:89)est(cid:82)(cid:85)s (cid:70)(cid:82)nt(cid:76)nue t(cid:82) s(cid:75)(cid:76)(cid:73)t t(cid:82)
(cid:83)ass(cid:76)(cid:89)e (cid:9) (cid:73)(cid:76)(cid:91)e(cid:71)(cid:16)(cid:76)n(cid:70)(cid:82)me asset (cid:70)lasses
▪ Gl(cid:82)(cid:69)al (cid:85)an(cid:74)e e(cid:91)(cid:83)an(cid:71)e(cid:71) (cid:9) (cid:90)ell (cid:83)(cid:82)s(cid:76)t(cid:76)(cid:82)ne(cid:71)
▪ T(cid:82)(cid:83) (cid:82)(cid:73)(cid:73)s(cid:75)(cid:82)(cid:85)e mana(cid:74)e(cid:85) (cid:73)(cid:82)(cid:85) 5 (cid:70)(cid:82)nse(cid:70)ut(cid:76)(cid:89)e (cid:92)ea(cid:85)s
257
273
312
297
331
15
16
17
18
19
(cid:48)arket s(cid:75)are1 (%)
SA un(cid:76)t t(cid:85)ust
(cid:41)S(cid:38)A a(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)e(cid:71) (cid:82)(cid:73)(cid:73)s(cid:75)(cid:82)(cid:85)e un(cid:76)t t(cid:85)ust
11%
8%
5%
2%
10
11
12
13
14
15
16
17
18
19
1 (cid:54)ource(cid:29) (cid:36)(cid:54)I(cid:54)(cid:36).
(cid:52)ua(cid:85)te(cid:85)l(cid:92)
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
40
NEDBANK GROUP – ANNUAL RESULTS 2019
(cid:26)(cid:26)
(cid:26)(cid:27)
RESULTS
PRESENTATION
Insurance – (cid:76)n(cid:70)(cid:85)ease(cid:71) (cid:70)la(cid:76)ms ne(cid:74)at(cid:76)(cid:89)el(cid:92) (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:85)e(cid:89)enue
(cid:47)ife value of ne(cid:90) business (Rm)
(cid:46)e(cid:92) drivers
(cid:14)11%
(cid:47)ife
500
450
400
350
300
250
200
150
100
50
(cid:16)
15
16
17
0
8
3
18
1
(cid:21)
(cid:23)
19
Non(cid:16)life gross (cid:90)ritten premiums (Rm)
▪ (cid:43)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:70)(cid:85)e(cid:71)(cid:76)t l(cid:76)(cid:73)e (cid:9) (cid:73)une(cid:85)al G(cid:85)(cid:82)ss (cid:58)(cid:85)(cid:76)tten P(cid:85)em(cid:76)ums
▪ G(cid:85)(cid:82)(cid:90)t(cid:75) (cid:76)n (cid:57)NB (cid:71)(cid:85)(cid:76)(cid:89)en (cid:69)(cid:92) (cid:76)n(cid:70)(cid:85)ease(cid:71) sales (cid:9)
(cid:85)e(cid:71)u(cid:70)e(cid:71) a(cid:70)(cid:84)u(cid:76)s(cid:76)t(cid:76)(cid:82)n (cid:70)(cid:82)sts
Non(cid:16)life
▪ (cid:43)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:70)la(cid:76)ms (cid:73)(cid:85)(cid:82)m a l(cid:82)(cid:90) 2018 (cid:69)ase
▪ In(cid:70)(cid:85)ease(cid:71) (cid:83)enet(cid:85)at(cid:76)(cid:82)n (cid:76)nt(cid:82) Ne(cid:71)(cid:69)an(cid:78) (cid:57)A(cid:41) t(cid:75)(cid:85)(cid:82)u(cid:74)(cid:75)
(cid:14)1%
(cid:89)e(cid:75)(cid:76)(cid:70)le (cid:89)alue(cid:16)a(cid:71)(cid:71)e(cid:71) (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)ts
1 200
1 180
1 160
1 140
1 120
1 100
1 080
1 060
1 040
1 020
1 000
980
NOTES:
15
16
17
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:24)
(cid:26)
1
1
18
0
(cid:27)
1
1
19
(cid:51)rospects for Nedbank (cid:58)ealt(cid:75)
Creating value in a c(cid:75)allenging environment
(cid:47)everage strengt(cid:75)s
(cid:58)ealt(cid:75) (cid:48)anagement
(cid:36)sset (cid:48)anagement
Insurance
Inte(cid:85)nat(cid:76)(cid:82)nal (cid:82)(cid:73)(cid:73)e(cid:85)(cid:76)n(cid:74)
Best(cid:16)(cid:82)(cid:73)(cid:16)(cid:69)(cid:85)ee(cid:71) (cid:83)(cid:75)(cid:76)l(cid:82)s(cid:82)(cid:83)(cid:75)(cid:92)
(cid:43)(cid:82)l(cid:76)st(cid:76)(cid:70) a(cid:71)(cid:89)(cid:76)(cid:70)e
Inte(cid:85)nat(cid:76)(cid:82)nal (cid:73)un(cid:71)
(cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e
S(cid:76)n(cid:74)le (cid:83)(cid:82)l(cid:76)(cid:70)(cid:92)
a(cid:71)m(cid:76)n(cid:76)st(cid:85)at(cid:76)(cid:82)n s(cid:92)stem
A(cid:70)(cid:70)ess t(cid:82) Ne(cid:71)(cid:69)an(cid:78) (cid:70)l(cid:76)ents
Strategic focus
(cid:41)(cid:82)(cid:70)us (cid:82)n (cid:43)N(cid:58) a(cid:71)(cid:89)(cid:76)(cid:70)e
Del(cid:76)(cid:89)e(cid:85)(cid:76)n(cid:74) l(cid:82)n(cid:74) te(cid:85)m
(cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e
E(cid:91)(cid:83)an(cid:71)(cid:76)n(cid:74) (cid:82)(cid:73)(cid:73)e(cid:85)(cid:76)n(cid:74)(cid:15)
le(cid:89)e(cid:85)a(cid:74)(cid:76)n(cid:74) (cid:71)ata (cid:9) (cid:71)(cid:76)(cid:74)(cid:76)tal
Financial targets1
R(cid:50)E
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29)
(cid:149) (cid:21)(cid:27)(cid:8)
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29)
(cid:149) 30(cid:8)
Cost(cid:16)to(cid:16)income
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29)
(cid:148) (cid:25)(cid:24)(cid:8)
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29)
(cid:148) (cid:25)(cid:24)(cid:8)
1 (cid:48)edium(cid:16)term de(cid:73)ined as 2 to (cid:22) years. (cid:47)on(cid:74)(cid:16)term de(cid:73)ined as (cid:24)(cid:14) years.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
(cid:26)(cid:28)
(cid:27)0
NEDBANK GROUP – ANNUAL RESULTS 2019 41
NEDBANK AFRICA REGIONS
SADC – adversely impacted by Zimbabwe
ETI – earnings growth slowing
Mfundo Nkuhlu
COO
NEDBANK GROUP LIMITED – Annual Results 2019
81
Nedbank Africa Regions – SADC adversely impacted by Zimbabwe & ETI
earnings growth slowing
Headline earnings, ROE
Key drivers
10.2
691
(35%)
NAR – HE of R457m (-35%) & RoE of 7.7%
10.3
SADC
7.7
▪ HE of R20m (-94%)
702
457
− Once-off tax adjustments & non-operational write-
(287)
(810)
off (R61m) in H1 2019
− Hyperinflationary conditions (R142m) &
impairment of legacy debt (R44m) in Zimbabwe
(3.6)
15
16
(12.6)
17
− Gross operating income down (-2%)
− Cost growth managed below inflation
ETI (Ecobank Transnational Incorporated)
▪ Sustained recovery of profitability, with earnings
18
19
growth slowing
Headline earnings (Rm)
ROE (%)
▪ Associate income of R668m, up 10%, while HE was
R437m, up 17%
NEDBANK GROUP LIMITED – Annual Results 2019
82
42
NOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 RESULTS
PRESENTATION
Nedbank (cid:36)frica Regions – (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:75)(cid:76)(cid:74)(cid:75)l(cid:76)(cid:74)(cid:75)ts
BOOKLET SLIDE
(cid:60)ear ended
S(cid:36)DC
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
G(cid:85)(cid:82)ss (cid:82)(cid:83)e(cid:85)at(cid:76)n(cid:74) (cid:76)n(cid:70)(cid:82)me (Rm)
Net m(cid:82)neta(cid:85)(cid:92) l(cid:82)ss (Rm)
PPOP (Rm)
Net (cid:76)nte(cid:85)est ma(cid:85)(cid:74)(cid:76)n (%)
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)ense (cid:85)at(cid:76)(cid:82) (%)
E(cid:73)(cid:73)(cid:76)(cid:70)(cid:76)en(cid:70)(cid:92) (cid:85)at(cid:76)(cid:82) (%)
(cid:38)(cid:85)e(cid:71)(cid:76)t l(cid:82)ss (cid:85)at(cid:76)(cid:82) (%)
A(cid:89)e(cid:85)a(cid:74)e (cid:74)(cid:85)(cid:82)ss (cid:69)an(cid:78)(cid:76)n(cid:74) a(cid:71)(cid:89)an(cid:70)es (Rm)
A(cid:89)e(cid:85)a(cid:74)e (cid:71)e(cid:83)(cid:82)s(cid:76)ts (Rm)
(cid:43)ea(cid:71)l(cid:76)ne e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t (Rm)
A(cid:89)e(cid:85)a(cid:74)e all(cid:82)(cid:70)ate(cid:71) (cid:70)a(cid:83)(cid:76)tal (Rm)
ROE (%)
ETI investment
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s (Rm)
Total (cid:75)eadline earnings (cid:11)Rm(cid:12)
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:8) c(cid:75)ange
F(cid:60) (cid:21)01(cid:28)
F(cid:60) (cid:21)01(cid:27)
(94)
(2)
(50)
0.3
2
(42)
(12)
17
(35)
(cid:21)0
3 0(cid:27)(cid:27)
(cid:21)(cid:28)(cid:25)
(cid:21)(cid:26)(cid:27)
(cid:26)(cid:17)0
(cid:24)0(cid:17)3
(cid:26)(cid:27)(cid:17)(cid:24)
1(cid:17)01
(cid:21)(cid:21) (cid:26)(cid:23)(cid:27)
30 (cid:28)(cid:25)(cid:28)
(cid:11)(cid:26)01(cid:12)
(cid:24) 0(cid:28)(cid:23)
0(cid:17)(cid:23)
(cid:23)3(cid:26)
(cid:23)(cid:24)(cid:26)
327
3 157
(cid:16)
554
7.3
49.9
76.5
0.51
22 670
30 263
(495)
5 815
5.6
375
702
NAR
Ot(cid:75)e(cid:85) (cid:70)luste(cid:85)s
3%
97%
A(cid:71)(cid:89)an(cid:70)es
4%
96%
(cid:43)ea(cid:71)l(cid:76)ne ea(cid:85)n(cid:76)n(cid:74)s
(cid:27)3
NOTES:
NOTES:
S(cid:36)DC – st(cid:85)ate(cid:74)(cid:76)(cid:70) (cid:71)e(cid:89)el(cid:82)(cid:83)ments
(cid:51)ortfolio optimisation
(cid:36)dapting to market c(cid:75)anges
Sale of Nedbank (cid:48)ala(cid:90)i1
▪ Re(cid:89)(cid:76)e(cid:90)e(cid:71) st(cid:85)ate(cid:74)(cid:76)(cid:70) (cid:73)(cid:76)t
▪ Less t(cid:75)an 0.1% (cid:82)(cid:73) (cid:74)(cid:85)(cid:82)u(cid:83) assets (cid:9) ea(cid:85)n(cid:76)n(cid:74)s
▪ T(cid:85)ansa(cid:70)t(cid:76)(cid:82)n t(cid:82) (cid:69)e (cid:70)(cid:82)n(cid:70)lu(cid:71)e(cid:71) (cid:76)n (cid:43)1 2020
(cid:61)imbab(cid:90)e (cid:75)(cid:92)perinflation
▪ Ne(cid:71)(cid:69)an(cid:78) (cid:61)(cid:76)m(cid:69)a(cid:69)(cid:90)e(cid:29) R108m (cid:43)E l(cid:82)ss
(2018(cid:29) R142m (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)t)
▪ Re(cid:16)(cid:70)(cid:82)n(cid:73)(cid:76)(cid:74)u(cid:85)(cid:76)n(cid:74) t(cid:75)e s(cid:75)a(cid:83)e (cid:82)(cid:73) t(cid:75)e (cid:69)alan(cid:70)e s(cid:75)eet
an(cid:71) (cid:69)us(cid:76)ness (cid:82)(cid:83)e(cid:85)at(cid:76)(cid:82)ns
Increased s(cid:75)are(cid:75)olding in (cid:37)anco (cid:56)nico
Client e(cid:91)perience (cid:9) digital en(cid:75)ancements
▪ All(cid:82)(cid:70)at(cid:76)n(cid:74) (cid:70)a(cid:83)(cid:76)tal t(cid:82) ta(cid:83) (cid:76)nt(cid:82) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:82)(cid:83)(cid:83)(cid:82)(cid:85)tun(cid:76)t(cid:76)es (cid:76)n M(cid:82)(cid:93)am(cid:69)(cid:76)(cid:84)ue
▪
In(cid:89)estment (cid:76)n (cid:76)nn(cid:82)(cid:89)at(cid:76)(cid:89)e ma(cid:85)(cid:78)et lea(cid:71)(cid:76)n(cid:74) (cid:70)l(cid:76)ent
e(cid:91)(cid:83)e(cid:85)(cid:76)en(cid:70)es(cid:29)
▪
In(cid:70)(cid:85)eas(cid:76)n(cid:74) (cid:82)u(cid:85) s(cid:75)a(cid:85)e(cid:75)(cid:82)l(cid:71)(cid:76)n(cid:74) (cid:73)(cid:85)(cid:82)m 50% (cid:14)1
s(cid:75)a(cid:85)e t(cid:82) 87.5%(cid:15) su(cid:69)(cid:77)e(cid:70)t t(cid:82) (cid:85)e(cid:74)ulat(cid:82)(cid:85)(cid:92) a(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)al
(cid:3013) M(cid:82)ne(cid:92) A(cid:83)(cid:83) (A(cid:73)(cid:85)(cid:76)(cid:70)a) en(cid:75)an(cid:70)ements(cid:15) 49
a(cid:71)(cid:71)(cid:76)t(cid:76)(cid:82)nal se(cid:85)(cid:89)(cid:76)(cid:70)es a(cid:71)(cid:71)e(cid:71) (cid:76)n 2019
▪ T(cid:85)ansa(cid:70)t(cid:76)(cid:82)n t(cid:82) (cid:69)e (cid:70)(cid:82)n(cid:70)lu(cid:71)e(cid:71) (cid:76)n (cid:43)1 2020
(cid:3013) Laun(cid:70)(cid:75) (cid:82)(cid:73) PA(cid:60)U a(cid:70)(cid:70)(cid:82)unt (cid:90)(cid:76)t(cid:75) (cid:93)e(cid:85)(cid:82)
ma(cid:76)ntenan(cid:70)e (cid:73)ees (cid:76)n Nam(cid:76)(cid:69)(cid:76)a
(cid:3013) Laun(cid:70)(cid:75) (cid:82)(cid:73) ne(cid:90) (cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)ate (cid:76)nte(cid:85)net (cid:69)an(cid:78)(cid:76)n(cid:74)
(cid:76)n Nam(cid:76)(cid:69)(cid:76)a (cid:9) eS(cid:90)at(cid:76)n(cid:76)
1 (cid:36)ccounted (cid:73)or under I(cid:41)(cid:53)(cid:54) (cid:24) (cid:177) (cid:49)on(cid:16)current (cid:36)ssets (cid:43)eld (cid:73)or (cid:54)ale (cid:9) (cid:39)iscontinued (cid:50)(cid:83)erations.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:27)(cid:23)
NEDBANK GROUP – ANNUAL RESULTS 2019 43
S(cid:36)DC – (cid:71)el(cid:76)(cid:89)e(cid:85)(cid:76)n(cid:74) (cid:76)nn(cid:82)(cid:89)at(cid:76)(cid:89)e ma(cid:85)(cid:78)et(cid:16)lea(cid:71)(cid:76)n(cid:74) (cid:70)l(cid:76)ent e(cid:91)(cid:83)e(cid:85)(cid:76)en(cid:70)es
BOOKLET SLIDE
Digital solutions
Digital solutions
Client value
Improved value propositions
Improved value propositions
Improved value propositions
Laun(cid:70)(cid:75)e(cid:71) Ne(cid:71)(cid:69)an(cid:78) M(cid:82)ne(cid:92) a(cid:83)(cid:83) (cid:76)n Ma(cid:92) 2019
M(cid:82)(cid:69)(cid:76)le (cid:69)an(cid:78)(cid:76)n(cid:74) s(cid:82)lut(cid:76)(cid:82)n laun(cid:70)(cid:75)e(cid:71) (cid:76)n
N(cid:82)(cid:89)em(cid:69)e(cid:85) 2019
Laun(cid:70)(cid:75)e(cid:71) PA(cid:60)U a(cid:70)(cid:70)(cid:82)unt (cid:90)(cid:76)t(cid:75)
(cid:93)e(cid:85)(cid:82) ma(cid:76)ntenan(cid:70)e (cid:73)ees
(cid:47)esot(cid:75)o(cid:15) Namibia(cid:15) (cid:48)ala(cid:90)i(cid:15) eS(cid:90)atini
(cid:61)imbab(cid:90)e
Namibia
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:27)(cid:24)
NOTES:
NOTES:
Nedbank (cid:36)frica Regions app – a(cid:71)(cid:71)(cid:76)t(cid:76)(cid:82)nal 49 (cid:73)un(cid:70)t(cid:76)(cid:82)nal (cid:9)
(cid:71)(cid:76)(cid:74)(cid:76)t(cid:76)se(cid:71) se(cid:85)(cid:89)(cid:76)(cid:70)es laun(cid:70)(cid:75)e(cid:71) (cid:69)(cid:92) en(cid:71) (cid:82)(cid:73) 2019
BOOKLET SLIDE
Selected (cid:18) uni(cid:84)ue features
Laun(cid:70)(cid:75)e(cid:71) (cid:76)n (cid:48)a(cid:92) (cid:21)01(cid:28)(cid:15) over
1(cid:26)(cid:15)(cid:28)00 use(cid:85)s (cid:69)(cid:92) (cid:92)ea(cid:85) en(cid:71)
1(cid:28) additional features a(cid:71)(cid:71)e(cid:71) (cid:82)(cid:89)e(cid:85)
(cid:83)(cid:85)e(cid:89)(cid:76)(cid:82)us A(cid:83)(cid:83) su(cid:76)te at laun(cid:70)(cid:75)
Great platform (cid:73)(cid:82)(cid:85) (cid:73)utu(cid:85)e
en(cid:75)an(cid:70)ements
UI (cid:9) U(cid:59) aligned to S(cid:36) (cid:48)one(cid:92)
a(cid:83)(cid:83)(cid:15) a(cid:70)(cid:75)(cid:76)e(cid:89)(cid:76)n(cid:74) (cid:70)(cid:82)ns(cid:76)sten(cid:70)(cid:92)
30 functional en(cid:75)ancements (cid:9)
digitised services a(cid:71)(cid:71)e(cid:71) (cid:76)n N(cid:82)(cid:89) 19
▪ S(cid:76)n(cid:74)le a(cid:83)(cid:83) st(cid:82)(cid:85)e (cid:83)u(cid:69)l(cid:76)(cid:70)at(cid:76)(cid:82)n
(cid:90)(cid:76)t(cid:75) mult(cid:76)(cid:70)(cid:82)unt(cid:85)(cid:92) sele(cid:70)t(cid:76)(cid:82)n
▪ (cid:38)(cid:85)e(cid:71)(cid:76)t (cid:70)a(cid:85)(cid:71) ATM l(cid:76)m(cid:76)t (cid:70)(cid:75)an(cid:74)e
▪
▪ Bl(cid:82)(cid:70)(cid:78) (cid:9) (cid:85)e(cid:82)(cid:85)(cid:71)e(cid:85) (cid:70)a(cid:85)(cid:71)s
▪
Inte(cid:85)nat(cid:76)(cid:82)nal (cid:70)a(cid:85)(cid:71) usa(cid:74)e
n(cid:82)t(cid:76)(cid:73)(cid:76)(cid:70)at(cid:76)(cid:82)n (cid:85)e(cid:84)uest
▪ Pe(cid:85)s(cid:82)nal l(cid:82)an(cid:15) (cid:89)e(cid:75)(cid:76)(cid:70)le
(cid:73)(cid:76)nan(cid:70)e (cid:9) (cid:75)(cid:82)me l(cid:82)an
(cid:76)nstalment (cid:70)al(cid:70)ulat(cid:82)(cid:85)s
(cid:181)A(cid:83)(cid:83)l(cid:92) n(cid:82)(cid:90)(cid:182) (cid:85)e(cid:84)uests
▪ Das(cid:75)(cid:69)(cid:82)a(cid:85)(cid:71) (cid:89)(cid:76)e(cid:90) (cid:82)(cid:73)
(cid:70)(cid:82)ns(cid:82)l(cid:76)(cid:71)ate(cid:71) (cid:69)alan(cid:70)es
▪ S(cid:75)a(cid:85)e a(cid:70)(cid:70)(cid:82)unt (cid:76)n(cid:73)(cid:82) (cid:90)(cid:76)t(cid:75) t(cid:75)(cid:76)(cid:85)(cid:71)
(cid:83)a(cid:85)t(cid:76)es us(cid:76)n(cid:74) (cid:58)(cid:75)atsA(cid:83)(cid:83)(cid:15)
messa(cid:74)e (cid:82)(cid:85) ema(cid:76)l
▪
Lea(cid:89)e (cid:73)ee(cid:71)(cid:69)a(cid:70)(cid:78)(cid:182) (cid:9) (cid:181)(cid:38)(cid:82)nta(cid:70)t
us(cid:182) (cid:90)(cid:76)t(cid:75)(cid:76)n a(cid:83)(cid:83)
(cid:36)pp enrolments ((cid:10)000)
8.2
4.1
2.7
N(cid:82)(cid:89)
9.2
4.9
3.1
22(cid:16)(cid:45)an
5.4
2.9
2.1
Se(cid:83)
26(cid:16)Ma(cid:92)
(cid:45)ul
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:27)(cid:25)
Nam(cid:76)(cid:69)(cid:76)a
Es(cid:90)at(cid:76)n(cid:76)
Les(cid:82)t(cid:75)(cid:82)
44
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
S(cid:36)DC – m(cid:76)(cid:91)e(cid:71) (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e (cid:76)m(cid:83)a(cid:70)te(cid:71) (cid:69)(cid:92) (cid:61)(cid:76)m(cid:69)a(cid:69)(cid:90)e
(cid:36)verage gross banking advances (R(cid:69)n)
(cid:36)verage deposits (R(cid:69)n)
Credit loss ratio ((cid:69)(cid:83)s)
(cid:14)0.3%
(cid:14)2%
50 (cid:69)(cid:83)s
23
18
NI(cid:48) ((cid:69)(cid:83)s)
27 (cid:69)(cid:83)s
727
18
23
19
700
19
30
18
NIR (Rm)
31
19
51
18
(cid:14)1%
Cost(cid:16)to(cid:16)income ratio (%)
(cid:14)3%
1 206
18
1 220
19
76
18
101
19
79
19
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:49)ote(cid:29) (cid:40)(cid:91)cludin(cid:74) (cid:61)im(cid:69)a(cid:69)(cid:90)e(cid:29) a(cid:89)era(cid:74)e ad(cid:89)ances (cid:14)(cid:22).(cid:25)(cid:8)(cid:15) a(cid:89)era(cid:74)e de(cid:83)osits (cid:14)11.1(cid:8)(cid:15) (cid:49)I(cid:53) (cid:14)(cid:24).1(cid:8)(cid:15) (cid:49)I(cid:48) (cid:16)(cid:23)(cid:19)(cid:69)(cid:83)s (cid:9) cost(cid:16)to(cid:16)income (cid:27)(cid:19).(cid:23)(cid:8).
(cid:27)(cid:26)
NOTES:
NOTES:
S(cid:36)DC – n(cid:82)n(cid:16)(cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e met(cid:85)(cid:76)(cid:70)s s(cid:75)(cid:82)(cid:90) (cid:83)(cid:82)s(cid:76)t(cid:76)(cid:89)e (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)ess
Clients ((cid:6)000)1
(cid:36)ctive (cid:36)pp users ((cid:6))2
(cid:51)oint(cid:16)of(cid:16)sale devices ((cid:6))
(1%)
(cid:14)94%
(cid:14)27%
339
18
336
19
8 653
18
16 789
19
6 443
18
8 161
19
(cid:37)ranc(cid:75)es ((cid:6))
(cid:36)T(cid:48)s ((cid:6))
(cid:43)eadcount ((cid:6))
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(1%)
s
r
e
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i
r
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98
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103
19
220
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218
19
2 619
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19
NEDBANK GROUP LIMITED – Annual Results 2019
1 (cid:55)a(cid:78)in(cid:74) into account auto closure rules (cid:11)2(cid:19)1(cid:27) re(cid:69)ased to cater (cid:73)or t(cid:75)is(cid:12)
2 (cid:40)(cid:91)cludin(cid:74) (cid:37)anco (cid:56)nico (cid:11)(cid:48)o(cid:93)am(cid:69)ique(cid:12) and (cid:61)im(cid:69)a(cid:69)(cid:90)e.
(cid:27)(cid:27)
NEDBANK GROUP – ANNUAL RESULTS 2019 45
Nedbank (cid:36)frica Regions – (cid:74)(cid:85)(cid:82)(cid:90)(cid:76)n(cid:74) t(cid:75)e asset (cid:9) t(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal (cid:83)(cid:82)(cid:85)t(cid:73)(cid:82)l(cid:76)(cid:82) (cid:76)n 2019
BOOKLET SLIDE
(cid:38)IB
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Namibia
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(Ne(cid:90) T(cid:85)ansa(cid:70)t(cid:76)(cid:82)nal a(cid:70)(cid:70)(cid:82)unt (cid:82)(cid:83)ene(cid:71))
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(Ne(cid:90) POS (cid:71)e(cid:89)(cid:76)(cid:70)es (cid:85)(cid:82)lle(cid:71) (cid:82)ut)
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(cid:48)10(cid:28)(cid:17)(cid:27)m
International (cid:43)ousing
Solutions Namibia
(cid:38)IB
Res(cid:76)(cid:71)ent(cid:76)al P(cid:85)(cid:82)(cid:83)e(cid:85)t(cid:92) De(cid:89)el(cid:82)(cid:83)ment
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N(cid:7)131m
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(cid:47)esot(cid:75)o
(cid:38)IB
(cid:58)(cid:82)(cid:85)(cid:78)(cid:76)n(cid:74) (cid:70)a(cid:83)(cid:76)tal (cid:73)a(cid:70)(cid:76)l(cid:76)t(cid:92)
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Surface (cid:58)ilmar
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(Ne(cid:90) a(cid:70)(cid:70)(cid:82)unt (cid:82)(cid:83)ene(cid:71))
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(cid:43)ilton (cid:43)otel
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Corporation
eS(cid:90)atini Sugar
(cid:36)ssociation
P(cid:85)(cid:76)ma(cid:85)(cid:92) (cid:69)an(cid:78)(cid:76)n(cid:74) (cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74) POS an(cid:71) e(cid:16)
(cid:70)(cid:82)mme(cid:85)(cid:70)e s(cid:82)lut(cid:76)(cid:82)n
Me(cid:71)(cid:76)um te(cid:85)m(cid:16)l(cid:82)an
E(cid:21)00m
Su(cid:74)a(cid:85) st(cid:82)(cid:70)(cid:78) (cid:73)un(cid:71)(cid:76)n(cid:74) l(cid:82)an
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De(cid:69)t an(cid:71) (cid:73)a(cid:70)(cid:76)l(cid:76)t(cid:92) A(cid:74)ent
(cid:56)S(cid:7)(cid:21)(cid:24)(cid:48)
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Me(cid:71)(cid:76)um Te(cid:85)m L(cid:82)an (cid:56)S(cid:7)10m
(cid:9) (cid:58)(cid:82)(cid:85)(cid:78)(cid:76)n(cid:74) (cid:38)a(cid:83)(cid:76)tal
(cid:61)(cid:58)(cid:47)(cid:7)1(cid:21)m
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:27)(cid:28)
NOTES:
ETI – (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92) a(cid:70)(cid:85)(cid:82)ss t(cid:75)(cid:85)ee (cid:85)e(cid:74)(cid:76)(cid:82)ns(cid:15) (cid:90)(cid:75)(cid:76)le N(cid:76)(cid:74)e(cid:85)(cid:76)an (cid:70)(cid:75)allen(cid:74)es (cid:83)e(cid:85)s(cid:76)st
(cid:43)eadline earnings (Rm)
(cid:43)ig(cid:75)lig(cid:75)ts
644
375
437
Susta(cid:76)ne(cid:71) (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92) (cid:73)(cid:85)(cid:82)m t(cid:75)(cid:85)ee (cid:85)e(cid:74)(cid:76)(cid:82)ns(cid:15) (cid:82)(cid:73)(cid:73)set (cid:69)(cid:92) (cid:83)(cid:82)(cid:82)(cid:85)
(cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e (cid:73)(cid:85)(cid:82)m N(cid:76)(cid:74)e(cid:85)(cid:76)an (cid:73)(cid:85)an(cid:70)(cid:75)(cid:76)se
▪ A(cid:58)A (cid:9) UEMOA (cid:71)el(cid:76)(cid:89)e(cid:85)e(cid:71) st(cid:85)(cid:82)n(cid:74) ea(cid:85)n(cid:76)n(cid:74)s (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)(cid:15)
susta(cid:76)na(cid:69)l(cid:92) (cid:74)ene(cid:85)at(cid:76)n(cid:74) e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)ts
▪ (cid:38)ESA(cid:182)s (cid:73)(cid:76)nan(cid:70)(cid:76)al (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92) (cid:70)(cid:82)nt(cid:76)nue(cid:71)(cid:15) al(cid:69)e(cid:76)t at a
sl(cid:82)(cid:90)e(cid:85) (cid:85)ate
(374)
▪ E(cid:70)(cid:82)(cid:69)an(cid:78) N(cid:76)(cid:74)e(cid:85)(cid:76)a(cid:182)s (cid:83)e(cid:85)(cid:73)(cid:82)(cid:85)man(cid:70)e (cid:71)ete(cid:85)(cid:76)(cid:82)(cid:85)ate(cid:71)
(975)
15
16
17
18
19
(cid:73)u(cid:85)t(cid:75)e(cid:85)(cid:15) (cid:71)ue t(cid:82)(cid:29)
(cid:3013) (cid:83)e(cid:85)s(cid:76)stentl(cid:92) ele(cid:89)ate(cid:71) NPLs
(cid:3013) a(cid:71)(cid:89)e(cid:85)se (cid:85)e(cid:74)ulat(cid:82)(cid:85)(cid:92) (cid:76)nte(cid:85)(cid:89)ent(cid:76)(cid:82)n
(cid:3013) (cid:82)n(cid:74)(cid:82)(cid:76)n(cid:74) e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:75)ea(cid:71)(cid:90)(cid:76)n(cid:71)s
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)0
NOTES:
46
NEDBANK GROUP – ANNUAL RESULTS 2019
Prospects for Nedbank Africa Regions
Leveraging enterprise capabilities to unlock opportunities
Strengths
SADC – manage, own & control banks
▪ Strong wholesale client service model
▪ Competitive digital platforms
▪ Strong credit risk management
Focus
Financial targets1
ROE
West & Central Africa – ETI
▪ Widest Pan African network
▪ LocalknowledgeAfricaTM
▪ Medium term:
≥ 15%
▪ Long term:
≥ 20%
▪ Digitisation & automation
▪ Risk management & cost control
▪ Zimbabwe business reconfiguration &
▪ Support board-driven agenda
▪ Commercialise collaboration
& increase deal flows
Mozambique growth
Cost-to-income
▪ Medium term:
≤ 65%
Zimbabwe
▪ Long term:
≤ 60%
1 Medium-term defined as 2 to 3 years. Long-term defined as 5+ years
NEDBANK GROUP LIMITED – Annual Results 2019
91
OUTLOOK & 2020, MT & LT TARGETS
Well positioned to grow off 2019 base, but
macroeconomic risks remain elevated
Mike Brown
Chief Executive
NEDBANK GROUP LIMITED – Annual Results 2019
92
47
RESULTS PRESENTATIONNOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 (cid:50)ur environment – sl(cid:82)(cid:90) (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92)(cid:15) (cid:69)ut ma(cid:70)(cid:85)(cid:82)e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:85)(cid:76)s(cid:78)s (cid:85)ema(cid:76)n ele(cid:89)ate(cid:71)
(cid:48)acroeconomic drivers1 (%)
(cid:51)rospects
(cid:21)01(cid:28)
(cid:21)0(cid:21)0
(cid:21)0(cid:21)1
(cid:21)0(cid:21)(cid:21)
▪ (cid:37)alance s(cid:75)eet
GD(cid:51) S(cid:36)
0.3% 0.7% 1.1% 1.3%
– Sta(cid:69)le (cid:90)(cid:75)(cid:82)lesale (cid:9) (cid:85)eta(cid:76)l a(cid:71)(cid:89)an(cid:70)es (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
– L(cid:76)(cid:84)u(cid:76)(cid:71)(cid:76)t(cid:92) (cid:83)(cid:85)(cid:82)(cid:73)(cid:76)le (cid:9) (cid:70)a(cid:83)(cid:76)tal le(cid:89)els t(cid:82) (cid:85)ema(cid:76)n st(cid:85)(cid:82)n(cid:74)
GD(cid:51) SS(cid:36) (e(cid:91)(cid:70)l SA)
4.0% 4.1% 4.4% 4.6%
▪ Income statement
Inflation ((cid:38)PI)
4.1% 4.3% 4.3% 4.9%
– Im(cid:83)a(cid:76)(cid:85)ments t(cid:82) (cid:76)n(cid:70)(cid:85)ease(cid:15) (cid:69)ut at m(cid:82)(cid:85)e n(cid:82)(cid:85)mal(cid:76)se(cid:71) le(cid:89)els
– Re(cid:89)enue (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:71)e(cid:83)en(cid:71)ent (cid:82)n SA e(cid:70)(cid:82)n(cid:82)m(cid:76)(cid:70) (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92)
Industr(cid:92)
credit gro(cid:90)t(cid:75)
(cid:36)ve prime
interest rate
5.3% 6.3% 7.0% 7.2%
▪ (cid:36)ssets under management
– E(cid:91)(cid:83)ense mana(cid:74)ement (cid:85)ema(cid:76)ns a (cid:78)e(cid:92) (cid:73)(cid:82)(cid:70)us
10.1% 9.8% 9.8% 9.8%
– (cid:58)ea(cid:78)e(cid:85) (cid:73)l(cid:82)(cid:90)s (cid:76)nt(cid:82) (cid:75)(cid:76)(cid:74)(cid:75)e(cid:85)(cid:16)ma(cid:85)(cid:74)(cid:76)n e(cid:84)u(cid:76)t(cid:92) (cid:83)(cid:85)(cid:82)(cid:71)u(cid:70)ts
– S(cid:82)l(cid:76)(cid:71) (cid:73)l(cid:82)(cid:90)s (cid:76)nt(cid:82) l(cid:82)(cid:90)e(cid:85)(cid:16)ma(cid:85)(cid:74)(cid:76)n (cid:70)as(cid:75) (cid:9) (cid:83)ass(cid:76)(cid:89)e
1 (cid:36)ll (cid:49)ed(cid:69)an(cid:78) (cid:40)conomic (cid:56)nit (cid:73)orecasts at (cid:45)anuary 2(cid:19)2(cid:19). | (cid:42)(cid:39)(cid:51) (cid:54)(cid:54)(cid:36) as (cid:83)er I(cid:48)(cid:41) (cid:11)(cid:45)anuary 2(cid:19)2(cid:19)(cid:12).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)3
NOTES:
3
2
1
0
12
9
6
3
0
NOTES:
(cid:58)e (cid:75)ave revie(cid:90)ed our targets in t(cid:75)e conte(cid:91)t of t(cid:75)e material do(cid:90)n(cid:90)ard
revision of t(cid:75)e macroeconomic environment since targets (cid:90)ere set
S(cid:36) GD(cid:51) gro(cid:90)t(cid:75) – (cid:70)2% l(cid:82)(cid:90)e(cid:85) (cid:69)(cid:92) 2020
C(cid:51)I (cid:11)inflation(cid:12) – (cid:70)1% l(cid:82)(cid:90)e(cid:85) (cid:69)(cid:92) 2020
8
6
4
2
0
17
18
19
20
21
22
17
18
19
20
21
22
S(cid:36) credit gro(cid:90)t(cid:75) – (cid:70)3% l(cid:82)(cid:90)e(cid:85) (cid:69)(cid:92) 2020
Interest rates – (cid:70)1% l(cid:82)(cid:90)e(cid:85) (cid:69)(cid:92) 2020
12
11
10
9
8
17
18
19
20
21
22
17
18
19
20
21
22
Financial targets1
R(cid:50)E
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29) (cid:149) 1(cid:26)(cid:8)
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29) (cid:149) C(cid:50)E (cid:14) (cid:23)(cid:8)
▪ P(cid:85)e(cid:89)(cid:76)(cid:82)us MLT(cid:29) (cid:149) C(cid:50)E (cid:14) (cid:24)(cid:8)
(e(cid:91)(cid:70)l (cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)ll)
▪ P(cid:85)e(cid:89)(cid:76)(cid:82)us 2020(cid:29) (cid:149) 1(cid:27)(cid:8)
(e(cid:91)(cid:70)l (cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)ll)
▪
Cost(cid:16)to(cid:16)income
▪ Me(cid:71)(cid:76)um te(cid:85)m(cid:29)
(cid:148) (cid:24)3(cid:8)
▪ L(cid:82)n(cid:74) te(cid:85)m(cid:29)
(cid:148) (cid:24)0(cid:8)
▪ P(cid:85)e(cid:89)(cid:76)(cid:82)us MLT(cid:29) (cid:24)0 to (cid:24)3(cid:8)
▪ P(cid:85)e(cid:89)(cid:76)(cid:82)us 2020(cid:29)
(cid:148) (cid:24)3(cid:8)
(cid:41)(cid:82)(cid:85)e(cid:70)asts at (cid:41)e(cid:69) 2018
(cid:41)(cid:82)(cid:85)e(cid:70)asts at (cid:41)e(cid:69) 2020
1 (cid:48)edium(cid:16)term(cid:29) 2(cid:16)(cid:22) years(cid:15) (cid:47)on(cid:74)(cid:16)term(cid:29) (cid:24)(cid:14) years.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)(cid:23)
48
NEDBANK GROUP – ANNUAL RESULTS 2019
2020 financial guidance1 based on current macroeconomic forecasts
▪ Average interest-earning banking asset growth just above mid-single digits.
NII
▪ NIM similar to the 2019 level of 3.52%.
CLR
▪ Similar to the 2019 CLR of 82 bps (within our target range of 60–100 bps).
NIR
▪ Around mid-single-digit growth.
Expenses
▪ Below mid-single-digit growth.
Growth in DHEPS for full-year 2020 around nominal GDP growth
[H1 2020 expected to be down on H1 2019 & stronger H2 2020 growth expected on H2 2019]
1 Based on current economic forecasts. Nominal GDP forecast for 2020 at 5.2% (CPI: 4.5% + GDP: 0.7%) | ETI associate income based on ETI’s own guidance.
NEDBANK GROUP LIMITED – Annual Results 2019
95
NEDBANK GROUP LIMITED – Annual Results 2019
96
49
RESULTS PRESENTATIONNOTES:NOTES:NEDBANK GROUP – ANNUAL RESULTS 2019 (cid:21)0(cid:21)0 (cid:9) medium(cid:16)to(cid:16)long(cid:16)term targets
BOOKLET SLIDE
(cid:48)etric
ROE
D(cid:76)lute(cid:71) (cid:43)EPS
(cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:21)01(cid:28)
(cid:21)0(cid:21)0 outlook 1
1(cid:24)(cid:17)0(cid:8)
(cid:11)(cid:25)(cid:17)3(cid:8)(cid:12)
A(cid:85)(cid:82)un(cid:71)
2019 le(cid:89)els
A(cid:85)(cid:82)un(cid:71) (cid:38)PI (cid:14)
GDP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:38)(cid:85)e(cid:71)(cid:76)t l(cid:82)ss (cid:85)at(cid:76)(cid:82)
(cid:27)(cid:21) bps
S(cid:76)m(cid:76)la(cid:85) t(cid:82) 2019
(cid:89)s
2019
(cid:48)edium(cid:16)term
target (2(cid:16)3 (cid:92)ea(cid:85)s)
(cid:47)ong(cid:16)term
target (5(cid:14) (cid:92)ea(cid:85)s)
(cid:376)
(cid:378)
(cid:376)
(cid:376)
(cid:149) 17%
(cid:149) (cid:38)OE (cid:14) 4%
A(cid:85)(cid:82)un(cid:71) (cid:38)PI (cid:14)
GDP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
(cid:149) (cid:38)PI (cid:14)
GDP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75) (cid:14) 5%
60–100 (cid:69)(cid:83)s
(cid:33) 85%
NIR(cid:16)t(cid:82)(cid:16)e(cid:91)(cid:83)enses
(cid:85)at(cid:76)(cid:82)
(cid:38)(cid:82)st(cid:16)t(cid:82)(cid:16)(cid:76)n(cid:70)(cid:82)me
(cid:85)at(cid:76)(cid:82)
(cid:38)ET1 (cid:38)AR
T(cid:76)e(cid:85) 1 (cid:38)AR
T(cid:82)tal (cid:38)AR
D(cid:76)(cid:89)(cid:76)(cid:71)en(cid:71) (cid:70)(cid:82)(cid:89)e(cid:85)
(cid:27)0(cid:17)(cid:27)(cid:8)
(cid:24)(cid:25)(cid:17)(cid:24)(cid:8)
11(cid:17)(cid:24)(cid:8)
1(cid:21)(cid:17)(cid:27)(cid:8)
1(cid:24)(cid:17)0(cid:8)
1(cid:17)(cid:27)(cid:23) (cid:91)
In(cid:70)(cid:85)eases(cid:15) (cid:69)ut
(cid:85)ema(cid:76)ns (cid:69)el(cid:82)(cid:90) ta(cid:85)(cid:74)ets
De(cid:70)(cid:85)eases sl(cid:76)(cid:74)(cid:75)tl(cid:92)(cid:15) (cid:69)ut
(cid:376)
(cid:85)ema(cid:76)ns a(cid:69)(cid:82)(cid:89)e MT ta(cid:85)(cid:74)et
(cid:148) 53%
(cid:148) 50%
(cid:58)(cid:76)t(cid:75)(cid:76)n
ta(cid:85)(cid:74)et (cid:85)an(cid:74)e
(cid:58)(cid:76)t(cid:75)(cid:76)n
ta(cid:85)(cid:74)et (cid:85)an(cid:74)e
(cid:376)
(cid:376)
Basel III (cid:69)as(cid:76)s(cid:29)
10.5–12.5%
(cid:33) 12%
(cid:33) 14%
1.75 t(cid:82) 2.25 t(cid:76)mes
1 2(cid:19)2(cid:19) outloo(cid:78) com(cid:83)ared (cid:90)it(cid:75) (cid:41)(cid:60) 2(cid:19)1(cid:28) (cid:69)ased on current economic (cid:73)orecasts.
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)(cid:26)
NOTES:
(cid:48)acroeconomic scenarios
BOOKLET SLIDE
(cid:181)(cid:48)ore of t(cid:75)e same(cid:182)
((cid:69)ase (cid:70)ase)
(cid:181)Seeing lig(cid:75)t(cid:182)
((cid:83)(cid:82)s(cid:76)t(cid:76)(cid:89)e s(cid:70)ena(cid:85)(cid:76)(cid:82))
(cid:181)Sinking into darkness(cid:182)
((cid:75)(cid:76)(cid:74)(cid:75)(cid:16)st(cid:85)ess s(cid:70)ena(cid:85)(cid:76)(cid:82))
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
SA GDP (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
0.3% 0.7% 1.1% 1.3% 0.3% 1.4% 2.0% 2.1% 0.3% 0.3% (0.2%)
(0.4%)
A(cid:89)e (cid:83)(cid:85)(cid:76)me
(cid:76)nte(cid:85)est (cid:85)ate
10.1% 9.8% 9.8% 9.8% 10.1% 9.4% 9.0% 9.0% 10.1% 10.3% 10.5% 10.3%
In(cid:73)lat(cid:76)(cid:82)n ((cid:38)PI)
4.1% 4.3% 4.3% 4.9% 4.1% 4.2% 4.3% 3.9% 4.1% 5.2% 6.1%
6.1%
(cid:38)(cid:85)e(cid:71)(cid:76)t (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)
5.3% 6.3% 7.0% 7.2% 5.3% 9.6% 10.7% 10.9% 5.3% 5.3% 3.7%
3.8%
P(cid:85)(cid:82)(cid:69)a(cid:69)(cid:76)l(cid:76)t(cid:92)2 (%)
(cid:24)0(cid:8)
(cid:21)0(cid:8)
10(cid:8)
1 (cid:49)ed(cid:69)an(cid:78) (cid:73)orecasts (cid:9) scenarios u(cid:83)dated(cid:29) (cid:45)anuary 2(cid:19)2(cid:19) (cid:11)(cid:49)ed(cid:69)an(cid:78) (cid:42)rou(cid:83) (cid:40)conomic (cid:56)nit(cid:12). | 2 (cid:40)(cid:91)cludes mild(cid:16)stress scenario o(cid:73) 2(cid:19)(cid:8).
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)(cid:27)
NOTES:
50
NEDBANK GROUP – ANNUAL RESULTS 2019
RESULTS
PRESENTATION
(cid:48)acroeconomic scenarios
BOOKLET SLIDE
(cid:181)(cid:48)ore of t(cid:75)e same(cid:182)
((cid:69)ase (cid:70)ase)
(cid:181)Seeing lig(cid:75)t(cid:182)
((cid:83)(cid:82)s(cid:76)t(cid:76)(cid:89)e s(cid:70)ena(cid:85)(cid:76)(cid:82))
(cid:181)Sinking into darkness(cid:182)
((cid:75)(cid:76)(cid:74)(cid:75)(cid:16)st(cid:85)ess s(cid:70)ena(cid:85)(cid:76)(cid:82))
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
1(cid:28)
(cid:21)0
(cid:21)1
(cid:21)(cid:21)
(cid:47)imited structural reform
▪ (cid:41)(cid:76)(cid:74)(cid:75)t a(cid:74)a(cid:76)nst (cid:70)(cid:82)(cid:85)(cid:85)u(cid:83)t(cid:76)(cid:82)n (cid:70)(cid:82)nt(cid:76)nues
▪ On(cid:74)(cid:82)(cid:76)n(cid:74) (cid:71)e(cid:69)ate a(cid:85)(cid:82)un(cid:71) lan(cid:71)(cid:15) N(cid:43)I (cid:85)ema(cid:76)ns
Significant improvements
▪ St(cid:85)u(cid:70)tu(cid:85)al (cid:85)e(cid:73)(cid:82)(cid:85)m a(cid:74)en(cid:71)a (cid:76)m(cid:83)lemente(cid:71)
▪ (cid:41)(cid:82)un(cid:71) s(cid:82)lut(cid:76)(cid:82)ns (cid:73)(cid:82)(cid:85) lan(cid:71) (cid:85)e(cid:73)(cid:82)(cid:85)m (cid:90)(cid:76)t(cid:75)(cid:82)ut a
Domestic reform stalls and global
conditions deteriorate
▪ Lan(cid:71) (cid:76)ssue lea(cid:71)s t(cid:82) (cid:85)(cid:76)s(cid:76)n(cid:74) tens(cid:76)(cid:82)ns (cid:9) s(cid:82)(cid:70)(cid:76)al
Domestic
drivers(cid:29)
(n(cid:82) (cid:76)mme(cid:71)(cid:76)ate (cid:85)es(cid:82)lut(cid:76)(cid:82)n)
▪ Pa(cid:70)e (cid:82)(cid:73) st(cid:85)u(cid:70)tu(cid:85)al (cid:85)e(cid:73)(cid:82)(cid:85)ms (cid:85)ema(cid:76)ns sl(cid:82)(cid:90)
▪ M(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)s (cid:71)(cid:82)(cid:90)n(cid:74)(cid:85)a(cid:71)e s(cid:82)met(cid:76)me (cid:76)n 2020(cid:15)
(cid:69)ut (cid:71)(cid:76)s(cid:70)(cid:82)unte(cid:71) (cid:69)(cid:92) t(cid:75)e ma(cid:85)(cid:78)et (cid:9) sea(cid:85)(cid:70)(cid:75) (cid:73)(cid:82)(cid:85)
(cid:75)(cid:76)(cid:74)(cid:75)e(cid:85) (cid:92)(cid:76)el(cid:71)s
▪ Es(cid:78)(cid:82)m – (cid:71)ete(cid:85)(cid:76)(cid:82)(cid:85)at(cid:76)(cid:82)n (cid:76)n (cid:73)(cid:76)nan(cid:70)e
(cid:70)(cid:82)nt(cid:76)nues. Le(cid:89)el 1 (cid:9) 2 l(cid:82)a(cid:71)(cid:16)s(cid:75)e(cid:71)(cid:71)(cid:76)n(cid:74) (cid:73)(cid:82)(cid:85)
ne(cid:91)t 18 m(cid:82)nt(cid:75)s(cid:15) (cid:90)(cid:76)t(cid:75) s(cid:82)me (cid:83)(cid:85)(cid:76)(cid:89)ate se(cid:70)t(cid:82)(cid:85)
ene(cid:85)(cid:74)(cid:92) (cid:74)ene(cid:85)at(cid:76)(cid:82)n (cid:82)(cid:89)e(cid:85) t(cid:76)me
ne(cid:74)at(cid:76)(cid:89)e (cid:76)m(cid:83)a(cid:70)t (cid:82)n (cid:70)(cid:82)n(cid:73)(cid:76)(cid:71)en(cid:70)e
▪ M(cid:82)(cid:85)e ma(cid:85)(cid:78)et (cid:9) (cid:76)n(cid:89)estment (cid:73)(cid:85)(cid:76)en(cid:71)l(cid:92)
(cid:83)(cid:82)l(cid:76)(cid:70)(cid:76)es
▪ Pu(cid:69)l(cid:76)(cid:70) (cid:73)(cid:76)nan(cid:70)es (cid:76)m(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)n(cid:74)
▪ SA a(cid:89)e(cid:85)ts a M(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)s (cid:71)(cid:82)(cid:90)n(cid:74)(cid:85)a(cid:71)e
▪ A(cid:70)(cid:70)ele(cid:85)ate(cid:71) Es(cid:78)(cid:82)m tu(cid:85)na(cid:85)(cid:82)un(cid:71)
(cid:71)(cid:76)s(cid:70)(cid:82)ntent
▪ Inte(cid:85)nal (cid:70)(cid:82)n(cid:73)l(cid:76)(cid:70)t (cid:76)n(cid:70)(cid:85)eases an(cid:71) (cid:73)(cid:76)(cid:74)(cid:75)t a(cid:74)a(cid:76)nst
(cid:70)(cid:82)(cid:85)(cid:85)u(cid:83)t(cid:76)(cid:82)n l(cid:82)ses m(cid:82)mentum
▪ St(cid:85)u(cid:70)tu(cid:85)al (cid:85)e(cid:73)(cid:82)(cid:85)ms (cid:73)a(cid:76)l
▪ Un(cid:76)(cid:89)e(cid:85)sal s(cid:82)(cid:89)e(cid:85)e(cid:76)(cid:74)n (cid:71)(cid:82)(cid:90)n(cid:74)(cid:85)a(cid:71)es – (cid:85)an(cid:71)
un(cid:71)e(cid:85) s(cid:76)(cid:74)n(cid:76)(cid:73)(cid:76)(cid:70)ant (cid:83)(cid:85)essu(cid:85)e
▪ Es(cid:78)(cid:82)m l(cid:82)a(cid:71)s(cid:75)e(cid:71)(cid:71)(cid:76)n(cid:74) (cid:69)e(cid:92)(cid:82)n(cid:71) le(cid:89)el 1 (cid:9) 2.
L(cid:76)ttle (cid:83)(cid:85)(cid:82)(cid:74)(cid:85)ess (cid:82)n tu(cid:85)na(cid:85)(cid:82)un(cid:71)
Global
drivers(cid:29)
Global environment less favourable t(cid:75)an
before(cid:15) but still supportive
▪ Sent(cid:76)ment s(cid:90)(cid:76)n(cid:74)s (cid:69)et(cid:90)een (cid:85)(cid:76)s(cid:78)(cid:16)(cid:82)n (cid:9) (cid:85)(cid:76)s(cid:78)(cid:16)
(cid:82)(cid:73)(cid:73) (cid:70)(cid:82)n(cid:71)(cid:76)t(cid:76)(cid:82)ns
(cid:43)ig(cid:75)l(cid:92) favourable environment
▪ S(cid:92)n(cid:70)(cid:75)(cid:85)(cid:82)n(cid:76)se(cid:71) (cid:74)(cid:85)(cid:82)(cid:90)t(cid:75)(cid:15) (cid:74)l(cid:82)(cid:69)al t(cid:85)a(cid:71)e (cid:90)a(cid:85)s
su(cid:69)s(cid:76)(cid:71)e (cid:9) (cid:70)(cid:82)mm(cid:82)(cid:71)(cid:76)t(cid:92) (cid:83)(cid:85)(cid:76)(cid:70)es (cid:74)a(cid:76)n
m(cid:82)mentum
(cid:36)dverse global conditions emerge
▪ (cid:38)(cid:82)mm(cid:82)(cid:71)(cid:76)t(cid:92) (cid:83)(cid:85)(cid:76)(cid:70)e (cid:83)(cid:85)essu(cid:85)es(cid:15) (cid:76)n(cid:70)(cid:85)ease(cid:71) t(cid:85)a(cid:71)e
(cid:83)(cid:85)(cid:82)te(cid:70)t(cid:76)(cid:82)n(cid:15) a(cid:71)(cid:89)e(cid:85)se B(cid:85)e(cid:91)(cid:76)t(cid:15) (cid:75)e(cid:76)(cid:74)(cid:75)tene(cid:71) (cid:74)l(cid:82)(cid:69)al
tens(cid:76)(cid:82)ns
▪ (cid:38)(cid:75)(cid:76)nese (cid:85)e(cid:70)(cid:82)(cid:89)e(cid:85)(cid:92) (cid:83)(cid:82)st (cid:52)1 (cid:82)n (cid:70)(cid:82)(cid:85)(cid:82)na(cid:16)(cid:89)(cid:76)(cid:85)us
▪ R(cid:76)s(cid:78)(cid:16)(cid:82)n (cid:74)l(cid:82)(cid:69)al (cid:70)(cid:82)n(cid:71)(cid:76)t(cid:76)(cid:82)ns (cid:9) (cid:70)(cid:82)(cid:85)(cid:82)na (cid:89)(cid:76)(cid:85)us
▪ R(cid:76)s(cid:78)(cid:16)(cid:82)(cid:73)(cid:73) (cid:74)l(cid:82)(cid:69)al (cid:70)(cid:82)n(cid:71)(cid:76)t(cid:76)(cid:82)ns (cid:74)(cid:76)(cid:89)en (cid:38)(cid:82)(cid:85)(cid:82)na(cid:16)(cid:89)(cid:76)(cid:85)us
(cid:76)m(cid:83)a(cid:70)t
(cid:70)(cid:82)nta(cid:76)ne(cid:71)
NEDBANK GROUP LIMITED – Annual Results 2019
(cid:28)(cid:28)
NOTES:
NOTES:
Nedbank Group in a strong position
BOOKLET SLIDE
(cid:43)eadline earnings (Rm)
(cid:47)oan gro(cid:90)t(cid:75) ((cid:38)AGR %)
Gl(cid:82)(cid:69)al
(cid:73)(cid:76)nan(cid:70)(cid:76)al
(cid:70)(cid:85)(cid:76)s(cid:76)s
(28%)
1
2
9
5
5
6
7
5
7
7
2
4
20.1
16.3
3.3
6.0
06–08
15–19
(cid:58)(cid:75)(cid:82)lesale
Reta(cid:76)l
NII sensitivit(cid:92) for 1(cid:8) c(cid:75)ange in
interest rates (R(cid:69)n)
1.3
7
8
7
1
1
5
9
4
3
1
6
0
5
2
1
0.5
0.6
06
07
08
09
10
11
12
13
14
15
16
17
18
19
08
09
19
NEDBANK GROUP LIMITED – Annual Results 2019
100
NEDBANK GROUP – ANNUAL RESULTS 2019 51
Nedbank Group in a strong position
BOOKLET SLIDE
Number of clients (m)
NIR income contribution (%)
Defaulted advances (%)
83%
4.3%
(2.3)
4.4
08
4.2
09
7.81
19
39.8
08
42.2
09
46.5
19
3.9
08
5.9
09
3.6
19
CET1 ratio (%)
Funding tenor (%)
Stage 3 overage (%)
1.6%
4%
LT
MT
ST
19.2
19.9
21.1
21.0
60.9
57.9
30.2
22.9
46.9
08
09
19
8.22
08
9.92
09
11.5
19
1 Includes dormant account closures. | 2 Core equity tier 1.
NEDBANK GROUP LIMITED – Annual Results 2019
NOTES:
32.0
08
33.9
09
38.0
19
101
Disclaimer
Ne(cid:71)(cid:69)an(cid:78) G(cid:85)(cid:82)u(cid:83) (cid:75)as a(cid:70)te(cid:71) (cid:76)n (cid:74)(cid:82)(cid:82)(cid:71) (cid:73)a(cid:76)t(cid:75) an(cid:71) (cid:75)as ma(cid:71)e e(cid:89)e(cid:85)(cid:92) (cid:85)eas(cid:82)na(cid:69)le e(cid:73)(cid:73)(cid:82)(cid:85)t t(cid:82) ensu(cid:85)e t(cid:75)e a(cid:70)(cid:70)u(cid:85)a(cid:70)(cid:92) an(cid:71)
(cid:70)(cid:82)m(cid:83)leteness (cid:82)(cid:73) t(cid:75)e (cid:76)n(cid:73)(cid:82)(cid:85)mat(cid:76)(cid:82)n (cid:70)(cid:82)nta(cid:76)ne(cid:71) (cid:76)n t(cid:75)(cid:76)s (cid:71)(cid:82)(cid:70)ument(cid:15) (cid:76)n(cid:70)lu(cid:71)(cid:76)n(cid:74) all (cid:76)n(cid:73)(cid:82)(cid:85)mat(cid:76)(cid:82)n t(cid:75)at ma(cid:92) (cid:69)e (cid:71)e(cid:73)(cid:76)ne(cid:71) as
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NEDBANK GROUP LIMITED – Annual Results 2019
10(cid:21)
NOTES:
52
NEDBANK GROUP – ANNUAL RESULTS 2019
53
RESULTS PRESENTATIONNOTESNEDBANK GROUP – ANNUAL RESULTS 2019 2019 RESULTS COMMENTARY
54
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 55
RESULTS
COMMENTARY
2019 RESULTS
COMMENTARY
BANKING AND ECONOMIC ENVIRONMENT
The global landscape deteriorated and financial market volatility
increased and persisted for much of 2019. International investors
became more risk-averse on growing fears of a global recession
as the evidence of slower growth in many countries accumulated,
triggered by an escalation in the trade war between the US and
China, although monetary conditions and trade tensions eased
somewhat towards the end of the year. While US growth remained
robust, most other developed countries experienced a significant
loss of momentum. Emerging markets were hard hit by the rise
in protectionism and the decline in global trade. Growth in China
moderated to its slowest pace since 1992 and the emerging impact
of the corona virus is expected to reduce growth even further.
Country-specific political and structural factors, together with the
disruptive impact of climate change, compounded the challenges
of most other emerging markets, including those in sub-Saharan
Africa. Hyperinflation eroded the value of the Zimbabwean
dollar as the country transitioned from a dual-currency system to a
mono-currency Zimbabwean dollar system, with the inflation index
reaching 552% in December 2019.
In SA power outages continued to disrupt production and spending
in the economy. Financial and operational challenges at many
state-owned enterprises (SOEs) and Eskom in particular resulted
in further bailouts by government, placing more pressure on an
already strained fiscus. Government’s debt metrics deteriorated
further and SA’s last remaining investment-grade sovereign risk
rating remains at risk. The process of restoring good governance
and rebuilding institutional capacity has started, but there has
been little visible progress in bringing those who were complicit in
state capture and corruption to book and reforms at the critically
important SOEs have been too slow. Business confidence reached
seven-year lows as policy uncertainty increased. While some
companies increased investment in new technologies, automation
and improved processes, expansionary investment in new
production capacity continued to decline, resulting in higher levels
of unemployment and growing numbers of discouraged workers.
The economy contracted over two quarters and is estimated to
grow by only 0,3% in 2019, which will be down from an already
modest 0,8% in 2018.
Growth in consumer spending slowed down significantly, impacted
by rising unemployment and slower wage growth. Encouragingly,
household balance sheets were little changed as the ratio of
household debt to disposable income was relatively steady at
72,7% throughout 2019.
Inflation surprised on the downside in 2019, ending the year at a
subdued 4,0%, contained mainly by weak domestic demand and
low food prices, which offset the impact of a moderately weaker
rand and volatile oil prices. In response to the benign inflation
outcomes and improved inflation outlook, SARB’s Monetary Policy
Committee cut interest rates by 25 bps in July 2019, followed by
another cut of 25 bps in January 2020.
The overall conditions in the banking sector remained very
challenging in 2019, with the weak economic environment resulting
in subdued client demand for most categories of credit and a
slowdown in transactional banking activity and deal flow. Credit
risks increased given the ongoing pressures on household incomes
and company profits.
REVIEW OF RESULTS
Nedbank Group’s financial performance in 2019 was below our
expectations in a very difficult macroeconomic environment
as HE declined 7,3% to R12,5bn and the group produced an
ROE (excluding goodwill) of 16,0%. In addition to the challenging
environment, HE was impacted by additional items in the second
half of the year, including hyperinflation in Zimbabwe (R142m HE
impact) and the raising of impairments against recoverability on
recognised intercompany legacy debt (R44m), the exercise of an
option that will increase our shareholding in Banco Único (R140m)
from 50% plus one share to approximately 87,5% (subject to
regulatory approval), the revaluing of a number of private-equity
investments as the underlying investee company performance
was weaker and public market multiples declined (R238m),
and the increase in impairments to just above the midpoint of
our target range of 60 bps to 100 bps as a result of increased
impairments raised on certain CIB watchlist items and an increase
in the central impairment. Growth was also impacted by the
high NIR base from the closure of round 4 renewable-energy
deals in 2018 and the onset of Youth Employment Service costs
(YES) (R96m) in 2019. Preprovisioning operating profit growth of
2,7% reflects good cost management offsetting slower revenue
growth. The impact of buying back and cancelling seven million
shares as a result of the odd-lot offer in December 2018 (following
the conclusion of the Old Mutual Managed Separation process)
resulted in a DHEPS decline of 6,3%, which was slightly lower than
the decline in HE.
IFRS 16, dealing with the accounting for leases, was implemented
on 1 January 2019. This resulted in lower levels of equity, higher
levels of assets and liabilities, as well as accounting changes
between NII and expenses. These changes were prospective, with
no restatements of the 2018 comparatives.
ROE (excluding goodwill) and ROE were lower than December
2019 at 16,0% and 15,0% respectively. ROA decreased 20 bps to
1,13% and the return on RWA decreased from 2,40% to 2,02%.
NAV per share of 18 204 cents increased 3,7%. The benefit to NAV
from earnings was partially offset by the day 1 impact of IFRS 16
(R0,7bn).
Our IFRS 9 fully phased-in CET1 and tier 1 capital ratios of
11,5% and 12,8% respectively, average LCR for the fourth quarter of
125% and an NSFR of 113% are all Basel III-compliant and reflective
of a strong balance sheet. On the back of our solid capital and
liquidity position, a final dividend of 695 cents was declared, with
the total dividend for the year of 1 415 cents being in line with the
prior year.
54
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 55
DELIVERING SUSTAINABLY TO ALL OUR STAKEHOLDERS
Nedbank continues to play an important role in society and in the economy, and we remain committed to delivering on our purpose of
using our financial expertise to do good. We contribute to the wellbeing and growth of the societies in which we operate by delivering
value to our staff, clients, shareholders, regulators and society.
For staff
We currently employ 29 403 staffmembers and paid
salaries and benefits of R17,3bn over the period under review.
Our bargaining-unit staff received annual salary increases
of 7,0% in 2019, ahead of inflation, and with management
and executives receiving increases below 4,5%, the blended
average staff salaries increased by 5,4%. We have refreshed
our Employee Value Proposition by launching our People
Promise, which is anchored in Nedbank being a purpose-led
organisation, while actively working towards positioning the
bank as an employer of choice for top talent. As part of our
groupwide People 2020 programme aimed at transforming
and aligning our culture and talent with our strategic objectives,
our executive management programmes have evolved to
be more digitally focused while equipping leaders to lead in
environments of ambiguity and exponential change. During
the year we invested over R337m in external training. Our new
Ways of Work (nWoW) practices to transform Nedbank into a
more agile organisation, holistically rethinking the way we work,
communicate and manage talent on our journey to creating a
more high-performing culture, are evident in the formation of
more than 150 squads (involving 3 000 staffmembers) working
according to this new approach. Through the Agility Centre we
have enhanced our redeployment solutions to provide better
support for staff displaced as a result of optimisation efforts
and organisational changes. Consequently, 620 staffmembers
were successfully redeployed during 2019 and retrenchments
were limited to 158. Our staff engagement score was strong at
75% and is 8% above industry levels. Transformation remains
a key imperative to ensuring Nedbank remains relevant in a
transforming society and we have continued to focus on this
across all levels at Nedbank, from our board of directors to all
our staffmembers. Currently, black representation at board level
is 69%, at executive level it is 46% and for our total staff it is just
more than 79%. Female representation at board level is 25%, at
executive level is 46% and for total staff is 62%.
For clients
We supported our clients by advancing R208bn (2018: R181bn) in
new loans to enable them to finance their homes, vehicles
and education, as well as to grow their businesses, while
safeguarding R904bn of deposits at competitive rates.
Our clients’ access to banking improved as digitally active
retail users increased by 16% to 1,8 million. Rooted in deep client
insights, we launched new market-leading digital innovations,
such as end-to-end digital client onboarding of individuals
(paperless, quicker and fully FICA-enabled), together with the
ability to sell transactional accounts as well as personal loans,
and pilots for investment products, credit cards and overdrafts.
The Nedbank Money app has been downloaded 3,9 million
times since its launch; the app and the Nedbank Private Wealth
app, remained two of the highest-rated SA banking apps on
the Apple and Google app stores. By the end of 2019 we had
launched three zero-monthly-fee accounts: pay-as-you-use
(PAYU), Unlocked.Me and MobiMoney. Our Money Secrets brand
campaign has been positively received, getting South Africans
to talk about money as a first step to making positive and
sustainable money management changes. In terms of client
experience, Nedbank was the only bank to improve its Net
Promoter Score (NPS) in 2019, showing a positive move from
37% in 2018 to 38%, and on the SAcsi client satisfaction index
we became the highest-rated large SA bank. CIB continued
to lead industry league tables in various categories, coming
first in deal flow for M&A advisors and third in deal value
for M&A sponsors, as well as winning the BEE deal of the
year. The business was also ranked number one for debt capital
market bond issuances in 2019. Our asset management business,
Nedgroup Investments, was named Offshore Management
Company of the Year for the fifth consecutive year at the Raging
Bull Awards.
For shareholders
On 20 August 2019 Nedbank celebrated its 50th year of being
listed on the JSE, illustrating the group’s strong foundations
and sustainable business model. We were disappointed that,
following a strong performance in 2018, when our share price
increased 7% (Banks index down 5% and FINI 15 down 8%), the
Nedbank share price was down 22% in 2019 compared with
the Banks index and the FINI 15, which were down 5% and
4% respectively. At our 52nd annual general meeting (AGM)
all resolutions were passed and, following engagements
with shareholders and enhancements to our remuneration
practices, we were pleased that our remuneration policy and
disclosure resolutions received more than 98% of votes in favour.
We continued to ensure transparent, relevant and timeous
reporting and disclosure to shareholders, and consequently
Nedbank became the first SA company to be named the overall
winner across three prestigious reporting and communication
awards in the same year: overall winner among JSE-listed
companies at the Investment Analyst Society Awards, the EY
Excellence in Integrated Reporting Awards and the CSSA/JSE
Integrated Reporting Awards. Additionally, our Remuneration
Report was recognised at the 2019 South African Reward
Association Awards for the outstanding contribution that
Nedbank has made in reporting on remuneration issues in a
trustworthy and transparent manner. In the context of greater
shareholder focus on environment, social and governance
(ESG) matters, we are proactively engaging with shareholders
on climate change resolutions, discussing both our thermal
coal lending policy and process for assessment of climate risk,
and these will be tabled at our AGM in May 2020. Nedbank’s
valuation metrics remain attractive, with price/earnings and
price-to-book ratios of 8,2 times and 1,2 times respectively and a
dividend yield of 6,6% at 31 December 2019.
For regulators
We achieved compliance with Basel III requirements ahead of the
full compliance timelines, including having a strong capital position
and achieving a CET1 ratio of 11,5% after the fully phased-in
day 1 impact of IFRS 9 (9 bps impact in 2019), an average LCR
of 125% in the fourth quarter of 2019 and an NSFR of 113% at
December 2019. We have invested over R111bn in government
and public sector bonds as part of our high-quality liquid asset
(HQLA) requirements and, in doing so, remain committed to
making a meaningful contribution to the countries in which we
operate, thereby appropriately supporting the funding needs
of governments. Cash taxation payments across the group of
R11,5bn were made relating to direct, indirect and employee taxes,
as well as other taxation. We continued to engage and work with
all our relevant regulators to ensure effective delivery of the
various regulatory programmes, with positive outcomes achieved
in 2019 across various regulatory requirements, including a focus
on the Financial Intelligence Centre Amendment Act (FICAA),
IFRS 9 and Risk Data Aggregation and Risk Reporting (RDARR).
Our compliance model ensures that appropriate controls
are in place to enable compliance with applicable regulatory
requirements and remediation where we fall short, and we
continue to leverage compliance as a strategic differentiator.
56
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 57
RESULTS
COMMENTARY
For society
Our long-term sustainability and success are contingent on
the degree to which we deliver value to society. Through the
considered development and delivery of products and services
that satisfy societal needs and through our own operations, we
play our part to enable a thriving society, create long-term value
and maintain trust to ensure the success of our brand. This is
particularly important in the current context of SA as well as
the broader African continent.
We have adopted the United Nations Sustainable Developments
Goals (SDGs) as a framework for measuring delivery on our
purpose. We continued to make progress in driving groupwide
adoption, awareness and delivery of the targeted nine SDGs
goals in order to bring our purpose truly to life. Key highlights
include the following:
• Quality education (SDG 4) – Over the past five years Nedbank
has provided approximately 5 500 students with student loans
to the value of R191m. A total of R45,3m of this was disbursed
to support almost 758 students in 2019. The provision of
affordable accommodation close to tertiary institutions was a
key focus for the year, with an investment of R1,8bn to clients
that delivered an additional 8 292 beds. More than 50% of our
R130m of CSI spend was directed to a mix of early-childhood
development, primary, secondary and tertiary education
initiatives. Included in this is support of programmes such as the
Ikusasa Student Financial Aid Programme (ISFAP) and provision
of bursaries for scarce skills to nearly 240 students. We also
provided education support through bursaries to 860 Nedbank
staffmembers and once-off education grants to 2 150 of our
staffmembers’ children – the value of this combined investment
was almost R18m for 2019. Our sponsorship of the Thuthuka
Education Upliftment Fund supports 45 students a year and
since inception we have contributed more than R26m and
funded the qualification of 49 new black chartered accountants
in SA.
• Clean water and sanitation (SDG 6) – We provided a R550m
general banking facility for Rand Water to assist in the
provision of bulk potable water in SA, as well as the provision
of R556m to the Trans-Caledon Tunnel Authority for three
water projects that are of key importance to the country’s
water supply. In terms of our own operations, as a result of
strict water restriction measures and floorspace consolidation,
our own total water consumption across all Nedbank campus
sites decreased by 10,3% in 2019. In addition, through the WWF
Nedbank Green Trust we have invested more than R93m in
41 water and conservation projects over the past five years.
Altogether 11 of those projects and an investment of nearly
R23m focused on water (fresh and marine) in particular.
• Affordable and clean energy (SDG 7) – In 2019 we became
the first SA commercial bank to launch a green bond on the
JSE, raising R1,7bn in the first issuance and a further R1,0bn in
the second issuance to fund solar and wind renewable-energy
projects. To date we have arranged 42 renewable-energy
projects in South Africa’s Renewable Energy Independent
Power Producing Procurement (REIPPP) programme,
with 2019 seeing us advancing significant capital into the
construction of the fourth round of projects, which will
start coming on stream in 2020. Through the deployment
of pioneering financing solutions, we also concluded
transactions worth over R700m with leading developers in
the embedded-generation space as well as our commercial
and agriculture clients. In addition, R800m of our property
lending over the past financial year went towards funding
the installation of solar power facilities. Nedbank also
hosted bi-monthly Energy Dialogues in partnership with
EE Publishers, bringing together over 1 000 energy sector
stakeholders looking for solutions to SA’s energy challenges.
In our insurance business we commercialised our geyser
telemetry product, Senseable, benefitting clients through
electricity savings and consequently reducing carbon emissions.
• Decent work and economic growth (SDG 8) – The Nedbank
Stokvel Account, which was launched in 2018 to provide safe,
easy and effective ways for groups of individuals to pool
their savings and grow their money, has attracted over
4 500 stokvel groups with more than 155 000 members.
We continued to participate in the CEO Initiative and the
projects it initiated, working with government, business and
labour towards a more inclusive SA society. In April 2019 we
activated our commitment to the YES initiative, through
corporate SA aims to provide internship opportunities for more
than one million South Africans. This is estimated to translate
into an annual investment of approximately 1,5% of net profit
after tax (SA business) and in 2019 cost us R134m pretax.
We placed 3 315 previously unemployed youth both directly and
through sponsored placements.
• Industry, innovation and infrastructure (SDG 9) – In addition
to funding water and energy infrastructure, we participated
in the loan facility for Ethiopian Railways to assist with the
construction of a 404 km strategic railway corridor linking
passengers and freight in the northern, central and eastern
regions of Ethiopia. We also provided R400m for the expansion
of telecommunications across the continent and provided
dollar-based funding for the provision of hospitals in support of
the Zambian government.
• Reduced inequalities (SDG 10) – In 2019 we reached a total
of 141 000 clients through financial wellness workshops.
A further 6,1 million individuals were reached through radio
and television shows, reinforcing our message around
money management, touching on topics such as budgeting,
savings and debt management. We have also provided
financial training to almost 400 000 youths and more than
1 200 entrepreneurs. From 1 April 2019 fees for the PAYU
Account were reduced from R5,50 monthly to zero and during
the year we opened more than 400 000 accounts. In our
own operations, we retained our BBBEE contributor status of
level 1 as measured under the Amended Financial Sector Code
(FSC) and 76% of our procurement spend was used to support
local SA business.
• Sustainable cities and communities (SDG 11) – We provided
R1,1bn for the development of affordable housing for
lower-income households, bringing our five-year investment in
this key sector to R4,2bn. We also provided funding of R277m
for the construction of buildings that conform to green-building
standards.
• Responsible consumption and production (SDG 12) – Over
the period we invested nearly R800m in the recycling sector
through the provision of funding that will create jobs in the
sector and develop new facilities to reuse plastic, thereby
stopping it from ending up in landfill. We also applied our
investment expertise to the agriculture sector to contribute to
its transformation, its farming practices as well as secondary
agriculture industries. Particular interventions include the
positive uptake of R100m for our shade-netting offering,
building on the positive takeup of water efficiency interventions
in 2018.
• Life on land (SDG 15) – Nedbank provided mining rehabilitation
guarantees of R320m in 2019 as well as a R700 000 investment
in a WWF Nedbank Green Trust Project – the Mining
Incubator, which is encouraging more sustainable practices
in the mining sector. In addition, through our water source
partnership with the WWF-SA we are focused on safeguarding
critical water source areas, biodiversity hotspots and rural
livelihoods. This partnership sees R5m invested annually to
coordinate efforts by a range of stakeholders in chosen water
source areas. Activities include alien invasive tree removal,
the rehabilitation of springs, implementation of grazing
programmes and piloting of new rural development models.
56
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 57
CLUSTER FINANCIAL PERFORMANCE
Nedbank Group’s HE declined 7,3% to R12 506m and an ROE
(excluding goodwill) of 16,0% remains above our estimated cost of
equity of 14,1%. ROEs were lower across all our frontline clusters as
HE declined given the difficult environment.
Change
(%)
HE
(Rm)
2019
6 167
5 293
1 042
2018
6 714
5 379
1 133
(8,1)
(1,6)
(8,0)
ROE (excluding
goodwill)
(%)
2019
17,7
17,3
24,8
2018
20,0
18,9
26,8
(35,0)
(4,6)
457
(453)
702
(433)
7,7
10,3
(7,3)
12 506
13 495
16,0
17,9
CIB
RBB
Wealth
Nedbank
Africa
Regions
Centre
Group
CIB HE declined 8,1% to R6,2bn while delivering an ROE of 17,7%.
HE was primarily impacted by an increase in the CLR to 26 bps
from 4 bps in the prior year, as well as lower private-equity
revaluations. NII growth of 2,0% was underpinned by solid
growth in banking advances (+6,8%) as pipeline deals were
converted. NIR declined by 4,1%, impacted by subdued client
activity, a decrease in private-equity income and base effects
from the fourth round of renewable-energy deals concluded in
H2 2018. Notwithstanding the increase in CLR to within CIB’s TTC
target range of 15 bps to 45 bps, credit quality remained sound in
a difficult environment, supported by proactive risk management,
and close monitoring and management of specific counters and
exposures to stressed sectors of the economy, such as cement,
construction, retail and selected SOEs. Preprovisioning operating
profit (PPOP) growth was down 1,1%.
HE in RBB declined 1,6% to R5,3bn and ROE was 17,3%. The lower
HE was mainly due to cyclically higher impairment charges.
The CLR increased to 138 bps and is now within the lower half
of the cluster’s TTC target range of 130 to 180 bps. Revenue
growth was solid as NII increased by 6,1%, while NIR increased
by 5,8% as main-banked clients in the middle and professional
segments grew while main banked clients in the entry-level
and youth segments decreased. Low expense growth was
enabled by ongoing optimisations of processes and operations,
including headcount reductions of 1 876, largely through natural
attrition. RBB delivered a strong PPOP increase of 11,4%, reflecting
continuing growth of the franchise.
Nedbank Wealth HE was down by 8,0% to R1 042m, with ROE of
24,8% due to 0,3% revenue decline in a challenging macroeconomic
environment and poor market conditions. Negative investor
confidence and lacklustre GDP growth in SA impacted
revenue streams in the local Wealth Management businesses.
The international Wealth Management business achieved good
underlying growth despite being adversely impacted by declining
interest rates. The Insurance business was negatively affected by
an increase in weather-related claims in the first half of the year.
Asset Management was impacted by AUM outflows experienced
in the latter part of 2018 as well as changing investor behaviour
towards lower-margin and lower-risk asset classes.
As of January 2020, the Rest of Africa business rebranded and
changed its name to Nedbank Africa Regions. Africa Regions’ HE
decreased by 35,0% to R457m and ROE declined to 7,7% mainly
due to hyperinflation accounting in Zimbabwe implemented from
1 July 2019, once-off adjustments, higher impairments and
lower associate income in Q4 2019 as we accounted for ETI’s
Q3 2019 results. The SADC business performance was affected
by continued macroeconomic pressures across the region,
especially in Zimbabwe, where the application of hyperinflation
accounting resulted in a net monetary loss of R296m and HE loss
of R142m.
The performance in the Centre reflects the increase in the central
impairment in the second half of the year of R250m to account
for risks that have been incurred but not yet emerged and a final
postretirement medical-aid (PRMA) credit amounting to R255m
(after tax) booked on the ongoing policy uncertainty in the first
half of the year following finalisation of outstanding tax matters,
compared with a R180m (after tax) credit in 2018. These were
offset by YES costs of R96m (after tax) and R140m (after tax)
relating to Nedbank accounting for the exercise of an option that
will increase our shareholding in Banco Único from 50% plus one
share to 87,5% (subject to regulatory approval).
FINANCIAL PERFORMANCE
Net interest income
NII increased 4,7% to R30 167m, supported by AIEBA growth of
8,6%. The AIEBA growth was driven by solid growth in advances
and higher levels of HQLA held in the banking book.
NIM decreased by 13 bps to 3,52% from 3,65% in December
2018. A negative endowment impact due to lower net
endowment balances, partially offset by the slightly higher
average prime rate in 2019 of 10,14% compared with 10,09% in
2018, decreased NIM by 3 bps. Asset pricing contributed a 6 bps
decline, with pressure most evident in Personal Loans (NCA
pricing caps) and competitive pricing on wholesale advances.
The implementation of IFRS 16 on 1 January 2019 decreased NIM
by 4 bps.
Impairments charge on loans and advances
Impairments increased strongly off the low prior-year
base, impacted by the deteriorating SA macroeconomic
environment. The impairment charge increased 66,2% to
R6 129m and CLR was up from 53 bps to 82 bps and as a
result moved from below the bottom end to around the midpoint
of the group’s TTC target range of 60 bps to 100 bps.
Impairments in CIB increased off a low base, with its CLR
at 26 bps, now within the lower half of its TTC target range
of 15 bps to 45 bps. Stage 2 impairments increased as a
result of favourable movements from stage 3 advances, and
this is evident in the CLR for Commercial Property Finance
improving to -2 bps, underpinned by proactive restructuring
and resolution of defaulted counters. Stage 3 impairments
increased in specific counters, particularly those operating in the
construction and cement, retail and telecommunication sectors.
Stage 3 impairments are individually determined in CIB and
are dependent on the value of the collateral we hold for each
exposure.
RBB’s CLR, at 138 bps, increased cyclically to just above the
bottom end of its TTC target range of 130 bps to 180 bps as a
result of risk normalisation off a low base and increased levels
of consumer stress driven by a deteriorating macroeconomic
environment. The CLR for MFC increased to 182 bps due to higher
levels of repossessions and writeoffs as well as increased inflow
into debt counselling. Business Banking has seen an increase in
CLR to 50 bps, with risk becoming increasingly evident in the
portfolio as clients experience the continued impact of the low
business confidence and constrained economy intensified by
rising costs, low demand and intermittent load-shedding. The CLR
increase for Unsecured Lending to 639 bps is marginally
higher than expectations, driven primarily by the deteriorating
macroeconomic environment as well as the negative collections
impact of a change to regulation around setoff. Home Loans
credit losses, at 14 bps, continue to reflect a high-quality book.
The group’s central provision decreased in the first half of the
year by R50m to R100m as the underlying risks for which these
central provisions had been raised emerged in the clusters. In the
second half we increased the provision by R150m to R250m
to account for risks that have been incurred but have not yet
emerged.
58
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 59
RESULTS
COMMENTARY
CLR (%)
CIB
RBB
Wealth
Nedbank Africa
Regions
Group
Banking
advances
(%)
46,3
46,5
4,2
3,0
100,0
2019
2018
TTC target
ranges
0,26
1,38
0,18
1,01
0,82
0,15–0,45
0,04
1,06
1,30–1,80
0,13 0,20–0,40
0,51
0,75–1,00
0,53
0,60–1,00
Stage 3 (defaulted) advances increased 9,5% to R27,6bn, driven
by a 22,5% increase in RBB as the weaker economic environment
placed additional stress on consumers, which in turn led
to increased levels of defaults, particularly in MFC (vehicle finance),
Business Banking and Unsecured Lending. This was partially
offset by a 28,1% reduction in CIB stage 3 advances, primarily
as a result of the successful restructuring, curing and rerating
of clients. Approximately 85% of CIB stage 3 advances are
concentrated in 10 counters.
The stage 1 coverage ratio increased to 0,49%
(December 2018: 0,45%), and the stage 2 coverage ratio
increased to 5,31% (December 2018: 4,97%) as portfolio
provisioning levels increased largely in line with advances growth.
The stage 3 coverage ratio increased to 38,0% (December
2018: 36,8%) given the mix impact from the higher contribution
of RBB stage 3 advances. RBB stage 3 coverage decreased
from 46,0% to 41,6%, mainly as a result of lower loss expectations
for stage 3 clients, an increase in distressed restructures and
a revision of point of writeoff in Card. Stage 3 coverage for
CIB increased to 24,6% from 11,6% as a result of the change of
composition in defaults.
Non-interest revenue
NIR was flat at R25 997m, primarily impacted by lower
private-equity revaluations and a high base from
renewable-energy deals in 2018.
• Commission and fee income grew 2,5% to R18 739m as RBB
reported solid underlying retail transactional NIR growth
of 6,3%, supported by solid main-banked client growth in
the more profitable middle, professional and SME client
segments, while youth and entry-level client segments
decreased. Commission and fee income in CIB fell 1,0% and
was adversely impacted by subdued client activity and a high
2018 base.
•
Insurance income was slightly down at R1 837m due to higher
weather-related claims in the first half of 2019 and lower life
reserve releases, partly offset by improved investment returns
and volume growth.
• Trading income increased 2,1% to R4 524m despite low volatility
and decreased volumes from a high base in 2018.
• Private-equity income declined, primarily due to downward
revaluation of unrealised investments as the subdued
macroeconomic environment impacted the profitability of
certain counters.
• Other NIR declined, mainly as a result of Nedbank accounting
for the exercise of an option that will increase our shareholding
in Banco Único from 50% plus one share to 87,5% (subject to
regulatory approval).
Expenses
Expenses grew 1,7% to R32 179m. Higher levels of amortisation
from the ongoing investment in technology as part of our
Managed Evolution IT strategy were offset by ongoing
optimisation initiatives.
• Staff-related costs decreased by 0,7%, following:
» average annual salary increases of 5,4% and a reduction
in staff numbers of 1 874 in 2019 largely through
natural attrition;
» a 24,6% decrease in STIs impacted by the group’s financial
performance and a 22,2% decrease in LTIs as expected
vesting ratios have reduced due to underperformance
against corporate performance targets; and
» finalisation in the first half of the settlement with our staff
with regard to PRMA obligations and benefits, resulting in
a final pretax credit of R354m in respect of a reversal of
actuarially estimated liabilities previously expensed. In the
first half of 2018 an initial pretax credit of R250m was raised.
• Computer-processing costs increased 12,4% to R4 878m,
driven by the expected increase in the amortisation charge
of 21,8% and higher processing volumes, offset by reduced
network-related costs as a result of efficiency savings.
• Fees and insurance increased by 4,1% as a result of association
fees and fees related to digital innovations.
• Other cost lines are being well managed, with increases below
inflation. In addition, we unlocked cumulative benefits of R1 147m
(2018: R680m) from process enhancements and implementing
our Target Operating Model (TOM). Other costs also include
Nedbank’s first-time participation in the YES initiative to the
value of R134m pretax (2018: nil).
The group’s growth in expenses of 1,7% was below total revenue
and associate income growth of 3,0%, resulting in a positive jaws
ratio of 1,3% and a cost-to-income ratio of 56,5%, compared with
57,2% in December 2018. The JAWS ratio, excluding associate
income, was 0,8%.
Hyperinflation accounting in Zimbabwe
On 11 October 2019 the Zimbabwe Public Accountants
and Auditors Board’s announced that Zimbabwe is in
hyperinflation. Consequently, Nedbank applied IAS 29 in
accounting for our operations in Zimbabwe, where we hold 66%
of the company’s equity. The key drivers included: a) adjusting
opening equity with the closing CPI index at 6,21 times and
similarly reducing the income statement by R246m (this
adjustment had no impact on NAV), b) recording gains from
the indexing of non-monetary assets (eg fixed assets) of R30m
and c) indexing the income statement, resulting in an increase in
certain lines and an equal and opposite charge in the monetary
loss line in the income statement of R80m. The HE impact of these
adjustments is R142m after adjusting for minorities. The NAV of
Nedbank Zimbabwe at 31 December 2019 was R123m. The HE loss
is driven by inflation as well as the weaker Zimbabwean dollar
versus the rand.
Earnings from associates
Associate income includes R668m (2018: R608m) relating to ETI
as a result of ETI reporting an attributable profit in the fourth
quarter of 2018 and the first three quarters of 2019, in line with our
policy of accounting for our share of ETI’s attributable earnings
a quarter in arrear. The total effect of ETI on the group’s HE was
a profit of R437m (2018: R375m), including the R231m of funding
costs.
Accounting for associate income, together with Nedbank’s
share of ETI’s other comprehensive income and movements
in Nedbank’s FCTR, resulted in the carrying value of the
group’s strategic investment in ETI decreasing from R3,2bn at
31 December 2018 to R2,7bn at 31 December 2019. ETI’s listed
share price on the Nigerian Stock Exchange decreased 53,6%
during 2019, which resulted in the market value of the group’s
investment in ETI (at the Nafex rate) decreasing to R1,3bn at
31 December 2019.
Due to the prolonged decline of ETI’s listed share price below its
carrying value, Nedbank reviewed its impairment provision at
31 December 2019. Management’s value-in-use analysis supports
the current carrying value of our investment. Our position will be
reassessed again at 30 June 2020 and at year-end.
58
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 59
STATEMENT OF FINANCIAL POSITION
Capital
The group remains well capitalised, at levels significantly above
the minimum regulatory requirements. The CET1 ratio of 11,5%
was impacted by the implementation of IFRS 16 on 1 January 2019
(R658m reduction in equity and R3,4bn increase in RWA), the
ongoing investment in software development costs as part of the
group’s Managed Evolution programme, the adverse impact of
changes in foreign currency translation reserves, increase in RWA
due to migration in certain credit portfolios, credit model updates
and capital optimisation initiatives.
The total tier 1 CAR was positively impacted by the issuance of
additional tier 1 instruments totalling R3,5bn. This was offset by
the further grandfathering of old-style preference shares (R531m)
in January 2019 in line with the Basel III transitional arrangements.
The total CAR was further impacted by the redemption of R2,5bn
tier 2 capital instruments (NED 15 and NED 16) and the issuance
of new-style tier 2 capital of R2,5bn in line with the group’s
capital plan.
Basel III capital
ratios (%)
CET1
Tier 1
Total CAR
2019
2018
Internal
target
range
Regulatory
minimum1
11,5
12,8
15,0
11,7
12,5
14,8
10,5–12,5
> 12,0
> 14,0
7,5
9,25
11,5
(Ratios calculated with full IFRS 9 phase-in and include unappropriated profits.)
1 The Basel III regulatory requirements exclude any idiosyncratic or
systemically important bank minimum requirements.
Funding and liquidity
Optimising our funding profile and maintaining a strong liquidity
position remain a priority for the group.
The group’s three-month average long-term funding ratio was
30,2% for the fourth quarter supported by the group’s successful
capital market issuances.
The group's December 2019 quarterly average LCR of 125%
exceeded the minimum regulatory requirement of 100% effective
from 1 January 2019 and represents the end of the Basel III
LCR phase-in period. To ensure ongoing compliance Nedbank
maintains appropriate operational buffers designed to absorb
seasonal and cyclical volatility in the LCR.
Nedbank Group LCR
HQLA (Rm)
Net cash outflows (Rm)
Liquidity coverage ratio (%)2
Regulatory minimum (%)
2 Average for the quarter.
2019
177 985
142 421
125,0
100,0
2018
162 678
148 694
109,4
90,0
Further details on the LCR are available in the 'Additional
information' section of the condensed consolidated financial
results.
Nedbank’s portfolio of LCR-compliant HQLA increased by 9,4%
to a December 2019 quarterly average of R178,0bn. Looking
forward, growth in the HQLA portfolio will be more aligned
with balance sheet growth, without the incremental HQLA
growth requirements that have emanated from the increasing
LCR phase-in of minimum regulatory requirements since 2015.
The HQLA portfolio, together with Nedbank’s portfolio of other
sources of quick liquidity, equates to total available sources of
quick liquidity of R227,7bn, representing 19,9% of total assets.
Nedbank exceeded the minimum NSFR regulatory requirement
of 100% effective from 1 January 2018 and reported a December
2019 ratio of 113,0%, compared with the December 2018 ratio of
114,0%. The focus going forward will be on achieving continued
NSFR compliance within the context of balance sheet optimisation.
Banking loans and advances
Total banking loans and advances increased by 7,2% to R764,2bn,
driven by continued solid growth in RBB and an increase in CIB
banking advances growth.
Banking loans and advances growth by cluster was as follows:
Rm
CIB
RBB
Wealth
Nedbank Africa Regions
Centre3
Impairment of advances
Group
3 Intercompany eliminations.
Change
(%)
8,3
6,9
(1,2)
3,0
54,1
13,2
7,2%
2019
2018
362 911
349 396
30 741
21 678
(571)
(17 534)
335 002
326 762
31 111
21 037
(1 244)
(15 488)
764 155
712 668
CIB banking loans and advances grew 8,3% to R362,9bn, driven
by strong pipeline conversion and momentum from the second
half of 2018 across energy, mining and public sector segments.
Property Finance loans and advances in CIB increased 7,9% to
R145,6bn as quality clients refinanced, and we grew in the rest of
Africa off a low base. The CPF portfolio contains good-quality
collateralised assets with low loan-to-value ratios and is managed
by a highly experienced property finance team.
RBB loans and advances grew 6,9% to R349,4bn, supported
by growth across all asset classes in line with our risk appetite
and selective origination strategies. Business Banking grew
advances by 4,5% (the core growth of 9,3% is exclusive of the client
migrations to RRB) due to an increase in new-loan payouts, client
drawdowns of existing facilities as well as new-client acquisitions.
MFC (vehicle finance) advances increased by 7,4% due to a
combination of increases in average payout per deal as well as
a slowdown in rundown/attrition. Unsecured Lending grew by
7,9% as a result of product and process enhancements, mostly
through digital channels, driving increased takeup. Card advances
increased by 4,6% in line with our transactional banking strategy.
Consumer segment residential-mortgage loans grew by 3,0%,
broadly in line with the industry.
Deposits
Deposits grew by 9,5% to R904,4bn, with total funding-related
liabilities increasing by 9,4% to R964,1bn, while the loan-to-deposit
ratio declined to 88,1%.
RBB and CIB grew deposits faster than nominal GDP of 4,4%, with
growth rates of 5,1% and 9,0% respectively. Wealth grew deposits
by 1,4% and Nedbank Africa Regions by 2,5% as a result of softer
markets in these jurisdictions.
Transactional deposits increased by 1,9% while investment
deposits increased by 8,0% as both retail and commercial clients
managed liquidity into term investments. RBB transactional
deposits grew by 4,3% while non-transactional deposits grew
faster, at 5,1%. CIB transactional deposits remained flat while
non-transactional investment deposits grew by 10,9% as clients
managed liquidity into investments instead of working capital
mainly due to the uncertain economic environment and the low
expected GDP growth. From a group perspective call and term
deposits grew by 6,7% while savings and fixed deposits grew
marginally. NCDs and other deposits, which include structured
deposits, grew by 21,7% and contributed positively to managing
Nedbank’s contractual longer-term funding ratio.
Group strategic focus
During 2019 we continued to focus on delivering on our strategic
focus areas, which are designed to create market-leading client
experiences and support growth in selected value-creating
areas. We made good progress in delivering market-leading
CVPs and digital innovations. This focus enabled us to grow new
60
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 61
RESULTS
COMMENTARY
revenue streams and unlock operating efficiencies. Our strategic
enablers – which include technology investments (with our
Managed Evolution IT strategy and Digital Fast Lane (DFL) as key
components), our people and our brand – are delivered through
process and operational excellence, our target operating model
and by embracing nWoW. This is enabling us to create a more
client-focused, agile, competitive and digital Nedbank.
• Delivering innovative, market-leading client experiences
» A key highlight for 2019 was the operationalisation of
Eclipse, our new platform that enables simplified digital
client onboarding for individual clients by allowing them to
open a FICA-compliant account through our staff-assisted
and self-service channels. The staff-assisted channel was
rolled out to more than 3 400 frontline users in RBB and
onto web and app channels in the second half of the year.
Client and transactional product onboarding for individual
clients are now following the full end-to-end process on this
platform and resulted in the following benefits: client-centred
onboarding (once for life), single onboarding foundation for
most of our core products (transactional account, personal
loans, selected investment products, card and overdrafts),
automated front-, middle- and backoffice processes
(reduced account opening times and disbursals), digital
FICA, biometrics and signing of contracts (no paper) and
lower cost of client onboarding. Initial highlights include more
than 90% of transactional products and personal loan sales
inbranch done through Eclipse. Transactional sales through
Eclipse increased from 37% in Q2 2019 to 76% in Q4 2019,
while personal-loan sales increased from 14% to 61% over the
same period. In addition, personal-loan sales through the
Money app increased from 2% to 14%. The cross-selling of
transactional accounts linked to the sales of personal
loans was three times higher than before. Account- and
product-opening times reduced significantly and reduction in
paper volumes of more than 50% contributed to significantly
improved client satisfaction levels. Juristic client onboarding
is currently in pilot in RBB and planned to be rolled out in
2020.
» The Money app, which makes banking more convenient for
our retail clients, has been downloaded 3,9 million times,
with more than 832 000 clients using it actively. The Money
App Lite was launched in the second half of 2019, giving
clients with limited data and device memory access to
online banking. Building on our capability of rolling out new
functionality on our apps, we introduced a market-first
lifestyle capability, HeyNed, a digital concierge that gives
clients a 24/7 personal assistant in their pockets and the
ability to purchase funeral policies on the app. The Nedbank
Private Wealth app, which had been ranked second best
globally by Cutter Associates International Research,
increased app downloads by 58% yoy. MobiMoney, our
mobile-based account with zero monthly fees and which
anyone with a valid SA identity number can open anywhere in
seconds, attracted almost 240 000 users, up by 53% yoy.
» Our Stokvel Account, which offers members of stokvels a
discount up to 10% at our retail partners, a burial benefit
of R10 000 per member for only R20 a month, zero
transaction fees and good interest rates, has attracted
over 4 500 stokvel groups, representing more than
155 000 members since its launch in March 2018. We have
enhanced our digital onboarding process to enable
account-opening on any USSD-enabled phone, catering for
all cellphone users.
» MyPocket, a free budgeting and savings pocket linked to any
Nedbank transactional account, was launched during the
period and reached balances of R161m. It offers clients up to
10 savings pockets, with each dedicated to a specific saving
goal such as daily expenses and emergencies. Clients earn
more interest than with a normal savings account and have
instant access to their money – no notice period is required
to access funds.
» The Karri app continued to achieve exponential growth in
2019 across all measures, with strong growth in active users
of almost 74 000, compared with 31 000 in 2018. The school
payment app is now used in more than 500 of the top
schools in SA, with a highlight being the signup of AdvTech,
one of the largest educational corporate groups in SA,
towards the end of 2019. The Karri app continues to achieve
mostly five-star ratings in the app store.
» As far as our integrated channels are concerned, we have
converted 64% of our outlets to new-image digital branches
to date. Significant progress has been made in enhancing
functionality across self-service and online channels, which
provide our clients with significantly enhanced convenience.
Our self-service kiosks within our branches enable our clients
to perform a range of self-service, including making ATM
limit changes, submitting overseas travel notifications and
opening transactional accounts seamlessly.
» Nedbank was the first bank in Africa to launch an application
programming interface (API) platform that is aligned with
the Open Banking Standard. The Nedbank API Marketplace
is an easy-to-use, secure offering that allows approved
partners to create innovative and disruptive solutions
that put client experience first. By using the Nedbank API
Marketplace, approved partners can leverage the bank’s
data and financial capabilities to integrate with our standard,
secure and scalable APIs.
•
In the second half of 2019 we launched our new, enhanced
loyalty and rewards solution – a money management
programme offering triple benefits (incentives for better
money management and doing good for society and towards
earning rewards).
• Growing our transactional banking franchise faster than
the market
» Our SA retail main-banked client numbers declined slightly
to 2,95 million, reflecting a disappointing reduction in the
entry-level and youth segment but strong increases in
the more profitable middle-market, professional and
small-business segments. These increases, along with
deepening our share of wallet, supported solid underlying
retail transactional NIR growth of 6,3%. The 2019 Consulta
Survey estimated Nedbank’s share of main-banked clients at
11,2%, down from 13,1% in 2018 (market share in ELB and youth
was down by 1,7% and by 4,3% respectively, but increased by
1,9% in the middle-market segments). Value-added services
sold through our digital channels increased by 29% to R250m.
» Our SADC business client base declined by 1,0% to 336 000.
Newly launched products and digital innovations started
delivering benefits, attracting new clients, but the overall
number of client numbers decreased given the closure of
dormant accounts.
» Our integrated model in CIB enabled deeper client
penetration and increased cross-sell. Competitive
transactional product and capabilities and leveraging our
strong balance sheet supported 32 primary-bank client wins
during the year.
• Being operationally excellent in all we do
» Cost discipline remains an imperative as we balance
investment with growth. We have ongoing initiatives to
optimise our cost base. These include the reduction of our
core systems from 250 to 117 since the inception of the
Managed Evolution programme, and we are on our way
to reaching our target of fewer than 85 core systems
by 2020. (During 2019 we revisited the definition of core
systems as part of our modernisation journey and are
building new systems not initially planned for. As a result our
target of 60 by 2020 has been revised). The rationalisation,
standardisation and simplification of core banking operating
systems enable reduced infrastructure, support and
maintenance costs, as well as reduced complexity and
60
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 61
increased agility in adopting new innovations. The time and
cost of bringing new products and services to market have
been reduced significantly as many of the foundational
capabilities are built into our onboarding and servicing
programmes. Overall, investments in various foundational IT
programmes are either complete or nearing completion and
we expect IT cashflow spend to decline from 2019 levels.
» During 2019 additional self-service options for functions that
were available previously only in branches or through staffed
channels were released on the Nedbank Money app and
the new Nedbank Online Banking site, taking the total digital
functions to 114 (compared with 70 in 2018). We deployed
27 new self-service kiosks across our branch network, up
by 6,6% yoy to 438, enabling clients to undertake a range of
self-service transactions, including ATM limit changes and
overseas travel notifications. This digitisation of services
in RBB has enabled us to reduce branch teller volumes by
24,5% and branch floor space by 41 500 m2 to date, and we
plan to achieve more than 49 000 m2 of optimisation by
2020 (equating to approximately 23% of our branch floor
space in 2014 when we started the journey). Over the past
12 months we reduced total group headcount by 1 874 (mainly
through natural attrition) and optimised our staffed points
of presence by closing 21 points of presence. Through our
Intelligent Depositor devices we now process more than
1,8 million deposits and more than 375 000 requests for
bank statements monthly – transactions and services that
previously could be done only over the counter in a branch.
Self-service cash deposit volumes increased to 73%, up from
61% in 2018.
» We implemented more than 300 software robots to date
(robotic process automation), up from 51 in 2018, to enhance
efficiencies and reduce processing errors in administratively
intense processes.
• Through our strategy of consolidating and standardising
corporate real estate, our number of campus sites (offices)
decreased from 31 to 27 over the year, with a longer-term
target of 23. Since 2016 we have saved 53 000 m2 (over and
above the 41 500 m2 saved in our branches). In the next few
years we will continue to optimise the portfolio by enhancing
workstation utilisation to greater than 100% (from the current
90%) by enabling flexible office constructs to support more
dynamic ways of work, while creating further value and cost
reduction opportunities.
• Our TOM 1.0 recorded savings of R480m in 2019, cumulative
savings of R1 147m to December 2019, which is ahead of our
R1,0bn pretax target by 2019 and on track to exceed the R1,2bn
target by 2020 as disclosed in the corporate performance
targets in our long-term incentive scheme. The 2019 savings
include R322m relating to our front-, middle- and backoffice
optimisation initiatives mainly in RBB and R121m related to our
digital (agile delivery) strategy. As we progress our Managed
Evolution journey, we are currently strategising about a TOM
2.0, which will look at the shape of our branch infrastructure in
the context of an increasingly digital world, a shift in our RBB
structure to be more client-centred, as well as shared services
optimisation across the group. We anticipate targets for TOM
2.0 will be communicated to the market in early 2021.
» Our total procurement cashflow spend declined by
3%, reflecting good cost management and centralisation
of purchasing. Over the past 12 months we reduced paper
consumption by 25% mainly through reduced printing and
digitisation of forms and statements.
• Managing scarce resources to optimise economic outcomes
» We maintained our focus on growing activities that generate
higher levels of EP, such as transactional deposits and
transactional-banking revenues. Our market share in
household deposits declined in 2019 due to proactive pricing
decisions to ensure an appropriate balance between margin
and volume.
62
NEDBANK GROUP – ANNUAL RESULTS 2019
» Our selective origination of personal loans, home loans
and commercial-property finance has proactively limited
downside credit risk in this challenging operating climate.
» During 2019 we embedded our commitment to the United
Nations SDGs. This will see lending flowing into targeted
areas that contribute to a better society. A key example is
our renewable-energy funding solutions, where R27,0bn
has been drawn as part of a R40bn commitment to the
SA Department of Energy’s renewable-energy independent
power producer procurement programme, while in response
to further rounds of renewable energy our board has
increased our risk limits to R50bn. In 2019 we became SA’s
first commercial bank to launch a green bond on the JSE,
raising a total of R2,7bn, having placed R1,7bn in April and a
further R1,0bn in October.
• Providing our clients with access to the best financial services
network in Africa
» In Central and West Africa, where we have adopted a
partnership approach, ETI remains an important strategic
investment for us by providing us with access to deal flow
in Central and West Africa and our clients with access
to a pan-African transactional banking network across
36 countries. ETI has reported 11 consecutive quarters of
profit to 30 September 2019 and is making good progress
with its transactional banking and digital strategy while
optimising its cost base. Asset quality and risk management
remain key priorities for the ETI board and executive,
particularly in a challenging Nigerian environment where
regulatory changes and economic challenges persist. For the
third quarter of 2019 ETI achieved a strong performance
from core West African operations and an improved
performance in the Central, Eastern and Southern Africa
(CESA) business, while the economic environment and ETI’s
performance in Nigeria remained challenging. Through our
collaboration 118 Nedbank wholesale clients are banking
with ETI across the continent in countries where Nedbank is
not present. Our gross return on the original cost of our ETI
investment improved to 10,7%.
» In SADC where we currently own, manage and
control five banks (excluding Nedbank Malawi), we continue
to build scale and optimise costs.
» To drive digital and transactional business we launched
the Nedbank Money app in Namibia, Eswatini, Malawi and
Lesotho, leveraging off the Nedbank Money app platform
in SA. The new app has an additional 60 new features when
compared to its predecessor, the Nedbank App Suite. It has
been well received by clients as we registered a 94% increase
in active app users during the year. In Namibia we launched
a new pay-as-you-use (PAYU) account targeting the
entry-level and middle segments.
» In December 2019 following a strategic review we announced
the disposal of our 100% shareholding in Nedbank Malawi
to MyBucks, a wholly owned subsidiary of a Frankfurt-listed
fintech. All conditions precedent for the sale have been
fulfilled and the transaction is on course for completion
during Q1 2020. Nedbank Malawi is a small bank in a small
market and contributed less than 0,1% to Nedbank Group’s
HE and total assets, with its market share in Malawi
approximately 1%. Nedbank Malawi has been accounted
for under IFRS 5: Non-Current Assets Held for Sale and
Discontinued Operations.
» Operating in Zimbabwe remains challenging as policy
uncertainty, increased government expenditure and a lack
of foreign direct investments have severely damaged the
Zimbabwean economy, contributing to hyperinflationary
conditions. Annual inflation rates exceeded 500% in 2019, and
hyperinflation eroded the value of the Zimbabwean dollar.
The country officially adopted hyperinflationary reporting
effective 1 July 2019 and this resulted in Nedbank Group
booking a net monetary loss of R296m in H2 2019, with the
resultant headline loss after tax and minorities amounting
to R142m.
NEDBANK GROUP – ANNUAL RESULTS 2019 63
RESULTS
COMMENTARY
» We accounted for the exercise of an option, that will increase
our shareholding in Banco Único (Mozambique) from 50%
plus one share to approximately 87,5%. The transaction
is expected to be concluded in H1 2020 and is subject to
regulatory approval.
Economic outlook
The outlook for the global economy remains uncertain with
risks increasing. The conclusion of a first-round US–China trade
deal and the 75 bps reduction in US interest rates since August
2019 have been overshadowed by the outbreak of the highly
contagious corona virus in early 2020. These developments
have fuelled renewed risk aversion and re-awakened concerns
over global growth prospects. The situation in China is currently
expected to stabilise, whereafter the world economy is forecast
to regain some momentum. The International Monetary Fund
expects moderately faster growth of 3,3% in 2020 and 3,4%
in 2021 from a disappointing 2,9% in 2019. Growth in advanced
countries are forecast to hold up relatively well, while softer,
improving conditions are projected for emerging and developing
countries. Growth in sub-Saharan Africa has also been revised
down to 3,5% for both 2020 and 2021, which is an improvement on
the 3,3% recorded in 2019.
SA’s growth prospects remain subdued, undermined by persistent
energy constraints, weak government finances and slow progress
in structural reforms. Eskom announced that load-shedding will
be implemented on a consistent basis over the next 18 months
to allow for better maintenance at both old and new power
stations. To compensate for the disruption the mining industry
will be allowed to generate electricity for internal consumption,
although this regulation is not yet in place. Government has also
promised to allow for greater private sector participation in the
energy market, but legislation has not yet been changed. Added
to these pressures, the public sector’s finances are too weak to
increase either consumption or capital expenditure. The possibility
of a Moody’s downgrade to subinvestment grade has increased
due to government’s weak fiscal position and the impact of
taxpayer-funded bailouts of many struggling SOEs (particularly
Eskom and South African Airways). Fixed investment is forecast
to remain weak given unreliable and limited electricity supply,
sluggish demand, considerable spare capacity and elevated cost
structures. Consumer spending is expected to grow moderately,
supported by slightly lower interest rates. However, the upside
will be contained by limited job creation, effects of fading wealth
and relatively high debt burdens. Real GDP is currently forecast to
grow around 0,7% in 2020, before gradually moving higher from
2021 onwards.
Inflation is expected to rise off a low base in early 2020 before
moderating to just below the 4,5% midpoint of the Reserve Bank’s
inflation targeting range. Cost-push shocks are likely to be kept
The current outlook for our revised targets is as follows:
in check by the absence of any demand pressure on prices. Given
the benign inflation outlook, the Monetary Policy Committee cut
interest rates by another 25 basis points in January 2020. There
may be some scope for further monetary policy easing in 2020,
although our forecast is for flat interest rates over the next two
years.
Despite the difficult operating environment in which to generate
growth, the SA banking system remains sound, liquid and
well capitalised. The relatively favourable inflation and interest
rate outlook is likely to support a modest improvement in
credit demand, but the underlying environment will remain
difficult throughout 2020. Household demand for credit will be
contained by job insecurity, high unemployment, slow income
growth and relatively high existing debt burdens. Corporate
demand is likely to remain volatile and weak, constrained by
low business confidence coupled with weak growth prospects
and tough operating conditions. The gradual rollout of the
latest renewable-energy projects may provide some support
to corporate loans.
Prospects
Our guidance on financial performance for the full year 2020, in a
global and domestic macroeconomic environment with increased
forecast risk, is currently as follows:
• Average interest-earning banking assets to grow slightly
above mid-single digits.
• NIM to be similar to the 2019 level of 3,52%.
• CLR to be similar to the 2019 CLR of 82 bps (around the
midpoint of our target range of 60 bps to 100 bps).
• NIR to grow around mid-single digits.
• Expenses to increase below the mid-single digits.
Given the expectations of a slowly improving SA economy, the
weaker base in 2019 and ongoing delivery on our strategy, our
current guidance for growth in DHEPS for the full 2020 year is to
be around nominal GDP growth. Given the 2019 base effects, we
anticipate DHEPS growth to be negative in the first half of the
year and up more strongly in the second half of the year.
In 2018 we set ourselves specific 2020 targets of ROE (excluding
goodwill) of greater than or equal to 18% and a cost-to-income
ratio of lower than or equal to 53% as a pathway to ongoing
and sustainable improvements in the key metrics that support
shareholder value creation. The actual macroeconomic conditions
have been materially worse than our 2018 forecasts and the
targets we set for 2020 are unlikely to be met. As a result we have
revisited our guidance on these two measures and introduced
targets for the medium (two to three years) and long term
(five years and more). We have also revised our ROE target to
include goodwill.
Metric
ROE
Growth in DHEPS
CLR
NIR-to-expense ratio
Efficiency ratio (including
associate income)
CET1 capital adequacy
ratio (Basel III)
Dividend cover
2019 performance4
Full-year 2020 outlook
Medium-term target
Long-term target
15,0%
(6,3%)
0,82%
80,8%
56,5%
Similar to 2019
≥ 17%
≥ 4% above COE
≥ consumer price index +
GDP growth
Around consumer price
index + GDP growth
≥ consumer price index +
GDP growth + 5%
Similar to 2019
Between 0,6% and 1,0%
of average banking
advances
Between 0,6% and
1,0% of average
banking advances
Increases
Decreases
> 85%
≤ 53%
> 85%
≤ 50%
11,5%
Within target range
10,5–12,5%
10,5–12,5%
1,84 times
Within target range
1,75–2,25 times
1,75–2,25 times
4 The COE is currently forecast at 14,2% in 2020.
62
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 63
Shareholders are advised that these forecasts are based on
organic earnings and our latest macroeconomic outlook, and have
not been reviewed or reported on by the group’s auditors.
consolidated financial statements are available for inspection
at the company’s registered office, together with the financial
statements identified in the respective auditors’ reports.
Board and leadership changes during the period
Rob Leith, who stepped down from the Nedbank Group
Limited Board on 15 October 2018 following Old Mutual Limited’s
unbundling of its controlling interest in Nedbank Group Limited,
was reappointed as a non-executive director with effect from
1 January 2019. Malcolm Wyman retired as Lead Independent
Director with effect from the close of Nedbank Group’s AGM on
10 May 2019. Mpho Makwana was appointed in the role of Lead
Independent Director effective from the same date. Professor
Tshilidzi Marwala was appointed as independent non-executive
director on 27 May 2019.
Anna Isaac was appointed as Group Chief Compliance Officer
and a member of the Group Executive Committee with effect
from 1 January 2019 following the retirement of Thabani Jali.
In addition, Jackie Katzin was appointed Group Company
Secretary, effective from the same date. On 31 March 2020 Brian
Kennedy, Group Managing Executive: Nedbank CIB, will reach the
group’s mandatory retirement age of 60. Following an extensive
internal and external process, Anél Bosman has been appointed
to succeed Brian as the Group Managing Executive: Nedbank CIB
and as a member of the Group Executive Committee with effect
from 1 April 2020. Given Nedbank’s ongoing focus on growth in the
rest of Africa, Dr Terence Sibiya, Managing Executive: Nedbank
Africa Regions, has been appointed as a member of the Group
Executive Committee with effect from 1 April 2020 (subject to
regulatory approval).
Basis of preparation*
Nedbank Group Limited is a company domiciled in SA.
The summary consolidated financial statements of the group at
and for the year ended 31 December 2019 comprise the company
and its subsidiaries (group) and the group’s interests in associates
and joint arrangements.
The summary consolidated financial statements are prepared
in accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports and the requirements of
the Companies Act, 71 of 2008, applicable to summary financial
statements. In terms of the Listings Requirements, provisional
reports have to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of
IFRS and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and also,
as a minimum, to contain the information required by IAS 34:
Interim Financial Reporting. The accounting policies applied in
the preparation of the consolidated financial statements, from
which the summary consolidated financial statements were
derived, are in terms of IFRS and are consistent with those used
for the previous annual financial statements, except for changes
arising from the adoption of IFRS 16, as set out in the notes to the
consolidated financial statements.
Events after the reporting period*
There are no material events after the reporting period to
report on.
Audited summary consolidated financial statements –
independent auditors’ opinion
The summary consolidated financial statements for the year
ended 31 December 2019 have been audited by Ernst & Young and
Deloitte & Touche, who expressed an unmodified opinion thereon.
The auditors also expressed an unmodified opinion on the annual
consolidated financial statements from which these summary
consolidated financial statements were derived.
Copies of the auditors’ report on the summary consolidated
financial statements and of the auditors’ report on the annual
The auditors’ report does not necessarily report on all of the
information contained in this results announcement. Shareholders
are therefore advised that, to obtain a full understanding of
the nature of the auditors’ engagement, they should obtain a
copy of the auditors’ report, together with the accompanying
consolidated financial statements.
Forward-looking statements
This announcement contains certain forward-looking statements
with respect to the financial condition and results of operations
of Nedbank Group and its group companies that, by their nature,
involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
Factors that could cause actual results to differ materially from
those in the forward-looking statements include global, national
and regional political and economic conditions; sovereign credit
ratings; levels of securities markets; interest rates; credit or other
risks of lending and investment activities; as well as competitive,
regulatory and legal factors. By consequence, all forward-looking
statements have not been reviewed or reported on by the
group’s auditors.
Final dividend declaration
Notice is hereby given that a final dividend of 695 cents per
ordinary share has been declared, payable to shareholders for
the six months ended 31 December 2019. The dividend has been
declared out of income reserves.
The dividend will be subject to a dividend withholding tax rate of
20% (applicable in SA) or 139 cents per ordinary share, resulting
in a net dividend of 556 cents per ordinary share, unless the
shareholder is exempt from paying dividend tax or is entitled to a
reduced rate in terms of an applicable double-tax agreement.
Nedbank Group’s tax reference number is 9375/082/71/7 and
the number of ordinary shares in issue at the date of declaration
is 497 053 536.
In accordance with the provisions of Strate, the electronic
settlement and custody system used by the JSE, the relevant
dates for the dividend are as follows:
Event
Last day to trade (cum dividend)
Shares commence trading
(ex dividend)
Record date (date shareholders
recorded in books)
Payment date
Date
Tuesday, 14 April 2020
Wednesday, 15 April 2020
Friday, 17 April 2020
Monday, 20 April 2020
Share certificates may not be dematerialised or rematerialised
between Wednesday, 15 April 2020, and Friday, 17 April 2020, both
days inclusive.
On Monday, 20 April 2020, the dividend will be electronically
transferred to the bank accounts of shareholders. Holders of
dematerialised shares will have their accounts credited at their
participant or broker on Monday, 20 April 2020.
The above dates are subject to change. Any changes will be
published on the JSE SENS and in the press.
For and on behalf of the board
Vassi Naidoo
Chairman
3 March 2020
Mike Brown
Chief Executive
64
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 65
RESULTS
COMMENTARY
Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus,
135 Rivonia Road, Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.
Transfer secretaries in SA
Link Market Services South Africa Proprietary Limited,
19 Ameshoff Street, Braamfontein, Johannesburg, 2001, SA.
Group Company
Secretary:
J Katzin
Reg number:
1966/010630/06
JSE share code:
NSX share code:
NED
NBK
ISIN:
ZAE000004875
Sponsors in SA:
Merrill Lynch SA Proprietary Limited
PO Box 4844, Marshalltown, 2000, SA.
Nedbank CIB
Transfer secretaries in Namibia
Transfer Secretaries Proprietary Limited, Robert Mugabe Avenue
No 4, Windhoek, Namibia.
Sponsor in Namibia: Old Mutual Investment Services
(Namibia) Proprietary Limited
Nedbank Group Limited: JSE alpha code: NEDI
PO Box 2401, Windhoek, Namibia.
Directors
V Naidoo (Chairman), MWT Brown** (Chief Executive), HR Brody,
BA Dames, NP Dongwana, EM Kruger, RAG Leith, L Makalima,
PM Makwana***, Prof T Marwala, Dr MA Matooane, RK Morathi**
(Chief Financial Officer), MP Moyo, JK Netshitenzhe, MC Nkuhlu**
(Chief Operating Officer), S Subramoney.
** Executive *** Lead Independent Director
This announcement is available on the group’s website at
nedbank.co.za, together with the following additional information:
• Detailed financial information
• Financial results presentation
• Link to a webcast of the presentation
For further information please contact Nedbank Group Investor
Relations at NedGroupIR@nedbank.co.za.
64
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP – ANNUAL RESULTS 2019 65
FINANCIAL RESULTS
67 Financial highlights
68 Consolidated statement of comprehensive income
69 Consolidated statement of financial position
70 Consolidated statement of changes in equity
72 Return on equity drivers
66
NEDBANK GROUP – ANNUAL RESULTS 2019
FINANCIAL RESULTS
FINANCIAL HIGHLIGHTS
for the year ended 31 December
Statistics
Number of shares listed
Number of shares in issue, excluding shares held by group entities
Weighted-average number of shares
Diluted weighted-average number of shares
Headline earnings
Profit attributable to ordinary equity holders
Total comprehensive income
Preprovisioning operating profit
Economic profit
Headline earnings per share
Diluted headline earnings per share
Basic earnings per share
Diluted basic earnings per share
Ordinary dividends declared per share
Interim
Final
Ordinary dividends paid per share
Dividend cover
Total assets administered by the group
Total assets
Assets under management
Life insurance embedded value
Life insurance value of new business
Net asset value per share
Tangible net asset value per share
Closing share price
Price/earnings ratio
Price-to-book ratio
Market capitalisation
Number of employees (permanent staff)
Number of employees (permanent and temporary staff)
Key ratios (%)
ROE
ROE (excluding goodwill)
Return on tangible equity
ROA
Return on RWA
NII to average interest-earning banking assets
NIR to total income
NIR to total operating expenses
CLR – banking advances
Cost-to-income ratio
Gross operating income growth less expense growth rate (JAWS ratio)
Effective taxation rate
Group capital adequacy ratios (including unappropriated profits):
– CET1
– Tier 1
– Total
Change
(%)
2019
2018
m
m
m
m
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
cents
cents
cents
times
Rm
Rm
Rm
Rm
Rm
cents
cents
cents
historical
historical
Rbn
0,8
0,9
(0,7)
(1,2)
(7,3)
(10,3)
(14,9)
2,7
(50,8)
(6,7)
(6,3)
(9,7)
(9,2)
3,6
(3,5)
5,1
(6,6)
9,9
9,5
11,4
14,4
10,8
3,7
3,4
(22,0)
(21,4)
(5,4)
(6,0)
497,1
481,2
480,0
487,5
12 506
12 001
11 735
22 577
1 412
2 605
2 565
2 500
2 462
1 415
720
695
1 440
1,84
1 474 485
1 143 349
331 136
3 188
421
18 204
15 426
21 430
8,2
1,2
106,5
29 213
29 403
15,0
16,0
17,8
1,13
2,02
3,52
46,3
80,8
0,82
56,5
1,3
22,8
11,5
12,8
15,0
493,2
477,1
483,2
493,2
13 495
13 376
13 794
21 990
2 868
2 793
2 736
2 768
2 712
1 415
695
720
1 370
1,97
1 341 250
1 043 912
297 338
2 786
380
17 560
14 917
27 472
9,8
1,6
135,5
30 877
31 277
16,8
17,9
19,8
1,33
2,40
3,65
47,4
82,1
0,53
57,2
2,7
25,2
11,7
12,5
14,8
NEDBANK GROUP – ANNUAL RESULTS 2019 67
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
for the year ended 31 December
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Impairments charge on financial instruments
Income from lending activities
Non-interest revenue
Operating income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit from operations before non-trading and capital items
Non-trading and capital items
Profit from operations
Share of income of associate companies
Profit from operations before direct taxation
Total direct taxation
Direct taxation
Taxation on non-trading and capital items
Profit for the year
Other comprehensive income/(losses) net of taxation
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Share of OCI of investments accounted for using the equity method
Debt investments at FVOCI – net change in fair value
Items that may not subsequently be reclassified to profit or loss
Share of OCI of investments accounted for using the equity method
Remeasurements on long-term employee benefit assets
Gains/(Losses) on property valuations
Total comprehensive income for the year
Profit attributable to:
– Ordinary equity holders
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Profit for the year
Total comprehensive income attributable to:
– Ordinary equity holders
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Total comprehensive income for the year
Headline earnings reconciliation
Profit attributable to ordinary equity holders
Less: Non-headline earnings items
Non-trading and capital items
Taxation on non-trading and capital items
Headline earnings
68
NEDBANK GROUP – ANNUAL RESULTS 2019
Note
%
change
1
2
3
4
5
6
7
7
10,2
13,6
4,7
66,2
(4,3)
0,1
(2,1)
1,7
16,3
(11,2)
> 100
(13,9)
50,2
(12,1)
(20,3)
(9,4)
> 100
2019
83 680
53 513
30 167
6 129
24 038
25 997
50 035
32 179
296
1 096
16 464
(651)
15 813
793
16 606
3 796
3 942
(146)
12 810
(1 075)
(159)
(1 025)
(232)
(145)
300
186
2018
75 941
47 122
28 819
3 688
25 131
25 976
51 107
31 632
942
18 533
(164)
18 369
528
18 897
4 762
4 807
(45)
14 135
(341)
449
(318)
(20)
(16)
(345)
(91)
(14,9)
11 735
13 794
(10,3)
(89,3)
(3,1)
79,0
(9,4)
(16,4)
> (100)
(3,1)
(79,0)
(14,9)
(10,3)
> 100
12 001
18
313
478
12 810
11 017
(73)
313
478
11 735
12 001
(505)
(651)
146
(7,3)
12 506
13 376
169
323
267
14 135
13 175
29
323
267
13 794
13 376
(119)
(164)
45
13 495
FINANCIAL RESULTS
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
at 31 December
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government securities
Other dated securities
Loans and advances to clients
Trading loans and advances
Loans and advances to banks
Other assets
Current taxation assets
Investment securities
Non-current assets held for sale
Investments in associate companies
Deferred taxation assets
Investment property
Property and equipment
Long-term employee benefit assets
Mandatory reserve deposits with central banks
Intangible assets
Total assets
Equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves
Total equity attributable to ordinary equity holders
Non-controlling interest attributable to ordinary shareholders
Holders of preference shares
Holders of additional tier 1 capital instruments
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Current taxation liabilities
Non-current liabilities held for sale
Deferred taxation liabilities
Long-term employee benefit liabilities
Investment contract liabilities
Insurance contract liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
Note
2019
2018
9
9
10
11
12
13
14 149
64 451
35 243
97 286
31 224
741 906
32 678
22 249
15 393
281
28 961
735
3 917
389
56
11 977
5 602
23 486
13 366
13 162
79 362
22 692
70 974
25 817
697 846
23 637
14 822
19 836
186
22 404
305
4 041
254
9 371
4 966
21 629
12 608
1 143 349
1 043 912
481
18 096
69 020
87 597
780
3 222
6 850
98 449
27 991
904 382
23 297
161
598
939
2 533
24 571
715
59 713
1 044 900
1 143 349
477
17 315
65 986
83 778
874
3 222
3 397
91 271
20 003
825 804
25 602
363
669
2 749
20 035
1 829
55 587
952 641
1 043 912
NEDBANK GROUP – ANNUAL RESULTS 2019 69
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 31 December
Rm
Balance at 31 December 2017
Impact of adopting IFRS 9 and IFRS 15, net of
taxation
Balance at 1 January 2018
Shares issued in terms of employee incentive
schemes
Odd-lot repurchase of shares
Additional tier 1 capital instruments issued
Shares (acquired)/no longer held by group
entities and BEE schemes
Preference share dividend paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary equity holders
and non-controlling interest
Exchange differences on translating foreign
operations
Movement in fair-value reserve
Losses on property revaluations
Remeasurements on long-term employee
benefit assets
Share of OCI of investments accounted for
using the equity method
Transfer to/(from) reserves
Share-based payment reserve movements
Additional tier 1 capital instruments interest
paid
Other movements
Balance at 31 December 2018
Impact of adopting IFRS 16, net of taxation
Balance at 1 January 2019
Shares issued in terms of employee incentive
schemes
Additional tier 1 capital instruments issued
Shares (acquired)/no longer held by group
entities and BEE schemes
Preference share dividend paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary equity holders
and non-controlling interest
Exchange differences on translating foreign
operations5
Movement in fair-value reserve
Gains on property revaluations
Remeasurements on long-term employee
benefit assets
Share of OCI of investments accounted for
using the equity method
Transfer to/(from) reserves
Share-based payment reserve movements
Additional tier 1 capital instruments interest
paid
Other movements
Number of
ordinary
shares
Ordinary
share
capital
Ordinary
share
premium
Foreign
currency
translation
reserve1
Property
reserve
revaluation
Share-based
payment
reserve
Other non-
Available-
Other
to ordinary
attributable
attributable
distributable
Fair-value
for-sale
distributable
equity
to ordinary
to preference
tier 1 capital
shareholders’
reserves2
reserves
reserve3
reserves4
holders
shareholders
shareholders
instruments
Equity
Holders of
additional
481 568 888
482
18 688
(1 580)
1 944
1 334
60 546
81 823
3 222
2 635
Total equity
attributable
Non-
controlling
interest
481 568 888
482
18 688
(1 580)
1 944
1 334
3 222
2 635
2 130 389
(7 056 639)
2
(7)
486 097
626
(1 972)
(27)
191
(91)
–
–
60
–
589
(398)
477 128 735
477 128 735
4 170 790
(125 146)
477
477
4
17 315
(1 389)
(1 389)
17 315
825
(44)
(91)
(128)
1 725
1 725
(4)
177
1 507
1 507
(632)
(855)
186
–
–
(470)
(68)
(787)
186
(72)
46
591
25
859
(14)
845
29
169
(140)
(323)
323
323
25
25
1 004
1 004
384
(384)
–
(20)
80
(105)
(80)
1 064
(80)
1 064
(232)
(238)
–
–
–
(3 838)
56 708
(59)
(6 744)
13 015
13 376
(345)
(16)
237
2
63 159
(651)
62 508
(197)
(7 112)
12 156
300
(145)
1
18
(3 218)
78 605
628
(1 979)
–
–
(86)
(6 744)
13 175
13 376
589
(20)
(91)
(345)
(334)
–
177
–
2
83 778
(651)
83 127
–
–
–
(44)
(7 112)
11 017
(68)
(232)
186
300
(1 170)
–
591
–
18
874
(7)
867
3 222
3 397
3 222
3 397
12 001
12 001
(313)
313
313
(14)
(73)
18
(91)
Total
equity
88 539
(3 232)
85 307
628
(1 979)
750
(86)
(323)
(6 744)
13 794
14 135
449
(20)
(91)
(345)
(334)
–
177
(255)
2
91 271
(658)
90 613
3 500
(44)
(313)
(7 126)
11 735
12 810
(159)
(232)
186
300
(1 170)
–
591
(525)
18
750
267
267
(255)
3 500
478
478
(525)
Balance at 31 December 2019
481 174 379
481
18 096
(2 244)
1 839
1 512
(55)
594
–
67 374
87 597
780
3 222
6 850
98 449
1 The initial application of IAS 29 resulted in an opening adjustment of R246m (non-controlling interest of R84m and R162m attributable to the parent). The effect of
hyperinflation is further described in note 8.
2 Represents other non-distributable revaluation surplus on capital items and non-distributable reserves transferred from other distributable reserves to comply with
various banking regulations of R168m (2018: R143m). This balance is offset by the difference between the at-acquisition fair value (net basis) and gross value of the
Banco Único put option of R223m.
3 The available-for-sale reserve is no longer applicable from 1 January 2018 due to the implementation of IFRS 9.
4 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves.
5 Exchange differences of R159m disclosed in the statement of comprehensive income includes R70m for the conversion of ETI from USD to ZAR. The R68m decrease in
the FCTR includes R70m relating to the conversion of ETI and a R2m increase related to foreign subsidiaries.
70
NEDBANK GROUP – ANNUAL RESULTS 2019
FINANCIAL RESULTS
Other non-
distributable
reserves2
Fair-value
reserves
Available-
for-sale
reserve3
Other
distributable
reserves4
Total equity
attributable
to ordinary
equity
holders
Non-
controlling
interest
attributable
to ordinary
shareholders
Number of
Ordinary
Ordinary
Property
Share-based
ordinary
shares
share
capital
share
translation
reserve
payment
premium
reserve1
revaluation
reserve
Foreign
currency
481 568 888
482
18 688
(1 580)
1 944
1 334
481 568 888
482
18 688
(1 580)
1 944
1 334
2 130 389
(7 056 639)
2
(7)
486 097
626
(1 972)
(27)
477 128 735
477 128 735
4 170 790
(125 146)
477
477
4
17 315
(1 389)
(1 389)
17 315
825
(44)
(4)
177
1 507
1 507
(632)
589
(398)
(68)
(787)
(91)
(128)
1 725
1 725
186
(72)
Rm
taxation
schemes
Balance at 31 December 2017
Impact of adopting IFRS 9 and IFRS 15, net of
Balance at 1 January 2018
Shares issued in terms of employee incentive
Odd-lot repurchase of shares
Additional tier 1 capital instruments issued
Shares (acquired)/no longer held by group
entities and BEE schemes
Preference share dividend paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary equity holders
and non-controlling interest
Exchange differences on translating foreign
operations
Movement in fair-value reserve
Losses on property revaluations
Remeasurements on long-term employee
benefit assets
Share of OCI of investments accounted for
using the equity method
Transfer to/(from) reserves
Share-based payment reserve movements
Additional tier 1 capital instruments interest
paid
Other movements
Balance at 31 December 2018
Impact of adopting IFRS 16, net of taxation
Balance at 1 January 2019
Shares issued in terms of employee incentive
schemes
Additional tier 1 capital instruments issued
Shares (acquired)/no longer held by group
entities and BEE schemes
Preference share dividend paid
Dividends paid to shareholders
Total comprehensive income for the year
Profit attributable to ordinary equity holders
and non-controlling interest
Exchange differences on translating foreign
operations5
Movement in fair-value reserve
Gains on property revaluations
Remeasurements on long-term employee
benefit assets
Share of OCI of investments accounted for
using the equity method
Transfer to/(from) reserves
Share-based payment reserve movements
Additional tier 1 capital instruments interest
paid
Other movements
1 The initial application of IAS 29 resulted in an opening adjustment of R246m (non-controlling interest of R84m and R162m attributable to the parent). The effect of
hyperinflation is further described in note 8.
2 Represents other non-distributable revaluation surplus on capital items and non-distributable reserves transferred from other distributable reserves to comply with
various banking regulations of R168m (2018: R143m). This balance is offset by the difference between the at-acquisition fair value (net basis) and gross value of the
Banco Único put option of R223m.
3 The available-for-sale reserve is no longer applicable from 1 January 2018 due to the implementation of IFRS 9.
4 Represents the accumulated profits after distributions to shareholders and appropriations of retained earnings to other non-distributable reserves.
5 Exchange differences of R159m disclosed in the statement of comprehensive income includes R70m for the conversion of ETI from USD to ZAR. The R68m decrease in
the FCTR includes R70m relating to the conversion of ETI and a R2m increase related to foreign subsidiaries.
25
25
1 004
1 004
384
(384)
–
191
(91)
–
–
60
–
(20)
80
(105)
(80)
1 064
(80)
1 064
(855)
186
–
–
(470)
(232)
(238)
46
591
25
–
–
–
60 546
81 823
(3 838)
56 708
(59)
(6 744)
13 015
13 376
(345)
(16)
237
2
63 159
(651)
62 508
(197)
(7 112)
12 156
(3 218)
78 605
628
(1 979)
–
(86)
–
(6 744)
13 175
13 376
589
(20)
(91)
(345)
(334)
–
177
–
2
83 778
(651)
83 127
–
–
(44)
–
(7 112)
11 017
12 001
12 001
(68)
(232)
186
300
(1 170)
–
591
–
18
300
(145)
1
18
Equity
attributable
to preference
shareholders
Holders of
additional
tier 1 capital
instruments
Total
shareholders’
equity
3 222
2 635
88 539
859
(14)
845
29
169
(140)
3 222
2 635
(323)
323
323
750
267
267
(255)
874
(7)
867
3 222
3 397
3 222
3 397
(313)
313
313
(14)
(73)
18
(91)
3 500
478
478
(525)
(3 232)
85 307
628
(1 979)
750
(86)
(323)
(6 744)
13 794
14 135
449
(20)
(91)
(345)
(334)
–
177
(255)
2
91 271
(658)
90 613
3 500
(44)
(313)
(7 126)
11 735
12 810
(159)
(232)
186
300
(1 170)
–
591
(525)
18
Balance at 31 December 2019
481 174 379
481
18 096
(2 244)
1 839
1 512
(55)
594
–
67 374
87 597
780
3 222
6 850
98 449
NEDBANK GROUP – ANNUAL RESULTS 2019 71
RETURN ON EQUITY DRIVERS
for the year ended 31 December
Rm
NII
Impairments charge on financial instruments
NIR
Income from normal operations
Total operating expenses
Zimbabwe hyperinflation
Share of profits of associate companies
Net profit before taxation
Indirect taxation
Direct taxation
Net profit after taxation
Non-controlling interest
Headline earnings
Daily average interest-earning banking assets
Daily average total assets
Daily average shareholders’ funds
Daily average shareholders’ funds, excluding goodwill
Note: Averages calculated on a 365-day basis.
NII/average interest-earning banking assets
Impairments/average interest-earning banking assets
NIR/average interest-earning banking assets
Total expenses/average interest-earning banking assets
Zimbabwe hyperinflation/average interest-earning banking assets
Associate income/average interest-earning banking assets
100% – Effective direct and indirect taxation rate
100% – Income attributable to minorities
Headline earnings
Interest-earning banking assets/daily average total assets
Return on total assets
Leverage
ROE
ROE, excluding goodwill
72
NEDBANK GROUP – ANNUAL RESULTS 2019
2019
30 167
(6 129)
25 997
50 035
(32 179)
(296)
793
18 353
(1 096)
(3 942)
13 315
(809)
12 506
857 981
1 104 160
83 579
78 402
2019
3,52%
less
0,71%
add
3,03%
5,84%
less
3,75%
less
0,03%
add
0,09%
2,15%
multiply
0,73
multiply
0,94
1,48%
multiply
77,7%
=
1,13%
2018
28 819
(3 688)
25 976
51 107
(31 632)
528
20 003
(942)
(4 807)
14 254
(759)
13 495
790 376
1 010 989
80 420
75 264
2018
3,65%
less
0,47%
add
3,29%
6,47%
less
4,0%
less
add
0,07%
2,54%
multiply
0,71
multiply
0,95
1,71%
multiply
78,2%
=
1,33%
multiply
multiply
13,21
=
15,0%
16,0%
12,57
=
16,8%
17,9%
SEGMENTAL
ANALYSIS
SEGMENTAL ANALYSIS
74
76
78
81
93
96
Our organisational structure, products and services
Operational segmental reporting
Nedbank Corporate and Investment Banking
Nedbank Retail and Business Banking
Nedbank Wealth
Nedbank Africa Regions
99 Geographical segmental reporting
NEDBANK GROUP – ANNUAL RESULTS 2019 73
OUR ORGANISATIONAL STRUCTURE, PRODUCTS
AND SERVICES
We deliver our products and services through four main business clusters.
NEDBANK CORPORATE AND
INVESTMENT BANKING
NEDBANK RETAIL AND BUSINESS
BANKING
Corporates, institutions and
parastatals with a turnover of
over R750m per annum.
Individual clients and businesses.
I
S
T
N
E
L
C
R
U
O
S
T
C
U
D
O
R
P
R
U
O
I
S
E
C
V
R
E
S
D
N
A
> 600 large corporate clients.
Full suite of wholesale banking
solutions, including investment banking
and corporate lending, global markets
and treasury, commercial-property
finance, deposit-taking, and
transactional banking.
• Strong franchise providing good returns.
• Market leader with strong expertise in commercial
property, corporate advances, advisory and
renewable-energy financing.
• Leading industry expertise in public sector, mining and
resources, infrastructure and telecoms.
• Solid advances pipeline (growth opportunities when business
confidence improves).
•
Integrated model delivering improved client service and
better coverage/deeper client penetration.
• Ability to attract and retain high-quality intellectual capital.
• Efficient franchise (best efficiency ratio) and high-quality
portfolio (low CLR).
H
T
G
N
E
R
T
S
F
O
S
A
E
R
A
R
U
O
I
I
N
O
T
A
T
N
E
R
E
F
F
D
D
N
A
I
> 7,5 million clients including:
• > 296 000 small and medium enterprises (typically
businesses with an annual turnover of less than R30m).
• > 14 700 business-banking client groups with an annual
turnover of between R30m and R750m per annum
(client groups with turnover < R30m previously managed
under Business Banking were migrated to small and
medium enterprises).
Of the total clients 2,95 million are retail main-banked.
Full range of services on ‘banking
and beyond’, including transactional
banking, card solutions, lending
solutions, deposit-taking, risk
management, investment
products, card-acquiring services
for businesses, ecosystems
and platforms-based solutions.
• A leader in business banking, underpinned by an accountable,
empowered, decentralised business service model.
• Differentiated and disruptive CVPs across our different
client segments, including Unlocked.Me, MobiMoney,
Home-buying Toolkit, Karri school payments app, SimplyBiz®
and API Marketplace.
• Digital onboarding capability for transactional products
across various channels.
• Awarded accolades for the ‘best innovation in retail
banking in SA’, the ‘best customer service provider in
Africa’, and ‘most innovative Retail Bank South Africa’ in 2019.
• Highly competitive relationship banking offering for our
affluent (Professional Banking) and small-business clients.
• Continued and strong improvement in the annual Consulta
SAcsi survey, NPS and social media sentiment.
I
S
C
R
T
E
M
Y
E
K
ASSETS
R544bn
HE
R6 167m
ROE
17,7%
ADVANCES
HE CONTRIBUTION
49,6%
49,3%
ADVANCES
HE CONTRIBUTION
43,8%
42,3%
ASSETS
R378bn
HE
R5 293m
ROE
17,3%
74
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
NEDBANK WEALTH
NEDBANK AFRICA REGIONS
High-net-worth individuals, as
well as other retail, business and
corporate clients.
Retail, small and medium enterprises,
and business and corporate clients
across the countries we operate in.
> 17 200 high-net-worth clients locally and internationally
(United Kingdom, Guernsey, Jersey, Isle of Man and the
UAE).
> 336 000 clients.
Wide range of financial services,
including high-net-worth
banking and wealth
management solutions, as well
as asset management and
insurance offerings.
Full range of banking services,
including transactional, lending,
deposit-taking and card
products, as well as selected
wealth management offerings.
Bancassurance offering in
selected markets.
Nedbank Insurance
SADC (own, manage and control banks)
• Access to Nedbank clients - opportunities for greater
penetration and collaboration.
• Market-leading digital innovations.
Nedbank Private Wealth
• Locally, first place for ESG/social impact investing in SA and
philanthropic advice.
•
Internationally, Best Boutique Private Bank at the
2019 WealthBriefing MENA Region Awards.
Unique Best of Breed™ asset management model
• Nedgroup Investments has maintained its top-three ranking
in offshore asset management companies in SA for the fifth
consecutive year.
• Presence in five SADC countries – well positioned for growth
on the back of a standardised model nuanced for market
context.
• Technology investments to enhance CVPs and achieve scale
(winner of ‘best internet bank’ in Mozambique).
• Winner of the fastest growing bank in Mozambique (Banco
Único) at the Global Banking & Finance Awards.
Central and West Africa (ETI alliance – 21,2% shareholding)
• The Ecobank–Nedbank Alliance: footprint across
•
39 countries, the largest in Africa.
Increase dealflow by leveraging ETI’s local presence and
knowledge and Nedbank’s structuring expertise.
ADVANCES
HE CONTRIBUTION
3,9%
8,3%
AUM
R331bn
HE
R1 042m
ROE
24,8%
ADVANCES
HE CONTRIBUTION
2,7%
3,7%
ASSETS
R38,4bn
HE
R457m
ROE
7,7%
NEDBANK GROUP – ANNUAL RESULTS 2019 75
OPERATIONAL SEGMENTAL REPORTING
for the year ended 31 December
Rm
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Summary of consolidated statement of financial position (Rm)
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intragroup assets
Total assets
Equity and liabilities
Total equity
Average allocated capital
Non-controlling interest
Other equity1
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intragroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
(Rm)
NII
Impairments charge on financial instruments
Income from lending activities
NIR
Operating income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit/(Loss) from operations
Share of income/(losses) of associate companies
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Headline earnings
Selected ratios
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)2
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio, including associate income (%)
Effective taxation rate (%)
Contribution to group EP/(loss) (Rm)
Number of employees (permament staff)3
37 635
64 451
35 243
128 510
796 833
80 677
–
1 143 349
98 449
85 111
10 852
2 486
27 991
904 382
52 814
59 713
–
1 143 349
30 167
6 129
24 038
25 997
50 035
32 179
296
1 096
16 464
793
17 257
3 942
13 315
18
313
478
12 506
857 981
620 113
1,13
2,02
15,0
3,52
46,3
80,8
0,82
56,5
22,8
1 412
29 213
34 791
79 362
22 692
96 791
736 305
73 971
–
1 043 912
91 271
81 620
7 493
2 158
20 003
825 804
51 247
55 587
–
1 043 912
28 819
3 688
25 131
25 976
51 107
31 632
–
942
18 533
528
19 061
4 807
14 254
169
323
267
13 495
790 376
561 356
1,33
2,40
16,8
3,65
47,4
82,1
0,53
57,2
25,2
2 868
30 877
1 798
30 773
35 174
63 270
395 589
17 122
4 719
53 946
22 653
51 131
358 639
16 719
543 726
507 807
34 885
34 885
27 973
379 656
8 426
705
92 081
543 726
7 390
917
6 473
8 175
14 648
6 604
181
7 863
121
7 984
1 836
6 148
(19)
33 555
33 555
19 986
348 310
15 878
979
89 099
507 807
7 246
103
7 143
8 521
15 664
6 572
86
9 006
(83)
8 923
2 197
6 726
12
6 167
6 714
1 042
1 133
457
371 862
302 360
1,15
2,04
17,7
1,99
52,5
123,8
0,26
42,1
23,0
1 234
2 553
341 863
264 108
1,36
2,54
20,0
2,12
54,0
129,7
0,04
41,9
24,6
1 976
2 681
6 168
3 105
349 396
10 610
11 577
377 751
30 573
30 573
326 763
10 762
14 984
355 614
28 471
28 471
338 901
5 829
2 448
322 520
3 534
1 089
377 751
355 614
19 831
4 823
15 008
13 318
28 326
20 384
548
7 394
7 394
2 059
5 335
42
5 293
349 599
203 383
1,44
2,60
17,3
5,67
40,2
65,3
1,38
61,5
27,8
967
17 607
18 692
3 433
15 259
12 591
27 850
20 032
275
7 543
7 543
2 114
5 429
50
5 379
328 676
186 876
1,58
2,88
18,9
5,69
40,2
62,9
1,06
64,0
28,0
1 359
19 430
1 746
20 701
7
30 741
24 238
77 433
4 204
4 204
6
40 060
29 703
3 460
77 433
1 148
57
1 091
3 436
4 527
3 113
113
1 301
1 301
259
1 042
52 968
26 468
1,40
3,94
24,8
2,17
75,0
110,4
0,18
67,9
19,9
447
2 207
1 562
18 833
6
31 111
19 630
71 142
4 225
4 225
5
39 495
24 764
2 653
71 142
1 113
39
1 074
3 484
4 558
3 012
108
1 438
1 438
305
1 133
1,69
4,56
26,8
2,31
75,8
115,7
0,13
65,5
21,2
536
2 173
38 385
37 518
106 054
6 341
4 083
38
848
21 678
4 898
499
38 385
5 943
5 943
11
30 223
1 891
317
1 547
233
1 314
1 220
2 534
2 427
296
58
(247)
672
425
(64)
489
32
1,19
0,93
7,7
5,01
44,1
50,3
1,01
70,6
(15,0)
(384)
2 581
5 615
4 776
10
668
21 037
4 915
497
37 518
6 812
6 812
12
29 472
894
328
1 627
113
1 514
1 206
2 720
2 416
37
267
611
878
23
855
153
702
1,79
1,43
10,3
5,25
42,6
49,9
0,51
70,2
2,6
(259)
2 617
21 582
8 894
24
64 392
(571)
23 809
(12 076)
106 054
22 844
9 506
10 852
2 486
1
115 542
6 965
56 243
(95 541)
251
99
152
(152)
–
(349)
196
153
153
(148)
301
5
271
478
(453)
19 790
1 807
23
44 992
(1 245)
21 945
(15 481)
71 831
18 208
8 557
7 493
2 158
86 007
6 177
53 191
(91 752)
71 831
(400)
141
141
174
315
436
279
279
168
111
4
273
267
(433)
40 623
36 485
(852)
4 265
(744)
3 976
48 216
24 823
30 848
48 938
30 998
49 064
52 704
38 964
1 Other equity includes the variance between average allocated capital, which is computed using the average-equity month-end balances and actual equity.
2 Cluster margins include internal assets, which are not material to NIM.
3 During the year 325 staffmembers transferred from RBB to the Centre as part of an efficiency initiative. Excluding this transfer, at 31 December 2019, staffmembers
in the Centre would have been 3 940.
76
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
6 168
3 105
349 396
10 610
11 577
377 751
30 573
30 573
326 763
10 762
14 984
355 614
28 471
28 471
338 901
5 829
2 448
322 520
3 534
1 089
377 751
355 614
19 831
4 823
15 008
13 318
28 326
20 384
548
7 394
7 394
2 059
5 335
42
5 293
349 599
203 383
1,44
2,60
17,3
5,67
40,2
65,3
1,38
61,5
27,8
967
17 607
18 692
3 433
15 259
12 591
27 850
20 032
275
7 543
7 543
2 114
5 429
50
5 379
328 676
186 876
1,58
2,88
18,9
5,69
40,2
62,9
1,06
64,0
28,0
1 359
19 430
1 746
20 701
7
30 741
24 238
77 433
4 204
4 204
6
40 060
29 703
3 460
77 433
1 148
57
1 091
3 436
4 527
3 113
113
1 301
1 301
259
1 042
1 562
18 833
6
31 111
19 630
71 142
4 225
4 225
5
39 495
24 764
2 653
71 142
1 113
39
1 074
3 484
4 558
3 012
108
1 438
1 438
305
1 133
1 042
1 133
457
52 968
26 468
1,40
3,94
24,8
2,17
75,0
110,4
0,18
67,9
19,9
447
2 207
48 216
24 823
1,69
4,56
26,8
2,31
75,8
115,7
0,13
65,5
21,2
536
2 173
30 848
48 938
1,19
0,93
7,7
5,01
44,1
50,3
1,01
70,6
(15,0)
(384)
2 581
19 790
1 807
23
44 992
(1 245)
21 945
(15 481)
71 831
18 208
8 557
7 493
2 158
86 007
6 177
53 191
(91 752)
71 831
141
141
174
315
(400)
436
279
279
168
111
4
273
267
(433)
40 623
36 485
6 341
4 083
38
848
21 678
4 898
499
38 385
5 943
5 943
11
30 223
1 891
317
5 615
4 776
10
668
21 037
4 915
497
37 518
6 812
6 812
12
29 472
894
328
21 582
8 894
24
64 392
(571)
23 809
(12 076)
106 054
22 844
9 506
10 852
2 486
1
115 542
6 965
56 243
(95 541)
38 385
37 518
106 054
1 547
233
1 314
1 220
2 534
2 427
296
58
(247)
672
425
(64)
489
32
251
99
152
(152)
–
(349)
196
153
153
(148)
301
5
271
478
(453)
52 704
38 964
1 627
113
1 514
1 206
2 720
2 416
37
267
611
878
23
855
153
702
30 998
49 064
1,79
1,43
10,3
5,25
42,6
49,9
0,51
70,2
2,6
(259)
2 617
(852)
4 265
(744)
3 976
NEDBANK GROUP – ANNUAL RESULTS 2019 77
Summary of consolidated statement of financial position (Rm)
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intragroup assets
Total assets
Equity and liabilities
Total equity
Average allocated capital
Non-controlling interest
Other equity1
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intragroup liabilities
Total equity and liabilities
Summary of consolidated statement of comprehensive income
(Rm)
NII
NIR
Impairments charge on financial instruments
Income from lending activities
Profit/(Loss) from operations
Share of income/(losses) of associate companies
Operating income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to:
– Non-controlling interest – ordinary shareholders
– Holders of preference shares
– Holders of additional tier 1 capital instruments
Average interest-earning banking assets (Rm)
Average risk-weighted assets (Rbn)
Headline earnings
Selected ratios
ROA (%)
RORWA (%)
ROE (%)
Interest margin (%)2
NIR to total income (%)
NIR to total operating expenses (%)
CLR – banking advances (%)
Cost-to-income ratio, including associate income (%)
Effective taxation rate (%)
Contribution to group EP/(loss) (Rm)
Number of employees (permament staff)3
37 635
64 451
35 243
128 510
796 833
80 677
–
1 143 349
98 449
85 111
10 852
2 486
27 991
904 382
52 814
59 713
–
1 143 349
30 167
6 129
24 038
25 997
50 035
32 179
296
1 096
16 464
793
17 257
3 942
13 315
18
313
478
12 506
857 981
620 113
1,13
2,02
15,0
3,52
46,3
80,8
0,82
56,5
22,8
1 412
29 213
34 791
79 362
22 692
96 791
736 305
73 971
–
1 043 912
91 271
81 620
7 493
2 158
20 003
825 804
51 247
55 587
–
1 043 912
28 819
3 688
25 131
25 976
51 107
31 632
–
942
18 533
528
19 061
4 807
14 254
169
323
267
13 495
1,33
2,40
16,8
3,65
47,4
82,1
0,53
57,2
25,2
2 868
30 877
543 726
507 807
1 798
30 773
35 174
63 270
395 589
17 122
34 885
34 885
27 973
379 656
8 426
705
92 081
543 726
7 390
917
6 473
8 175
14 648
6 604
181
7 863
121
7 984
1 836
6 148
(19)
1,15
2,04
17,7
1,99
52,5
123,8
0,26
42,1
23,0
1 234
2 553
4 719
53 946
22 653
51 131
358 639
16 719
33 555
33 555
19 986
348 310
15 878
979
89 099
507 807
7 246
103
7 143
8 521
15 664
6 572
86
9 006
(83)
8 923
2 197
6 726
12
1,36
2,54
20,0
2,12
54,0
129,7
0,04
41,9
24,6
1 976
2 681
6 167
6 714
790 376
561 356
371 862
302 360
341 863
264 108
1 Other equity includes the variance between average allocated capital, which is computed using the average-equity month-end balances and actual equity.
2 Cluster margins include internal assets, which are not material to NIM.
3 During the year 325 staffmembers transferred from RBB to the Centre as part of an efficiency initiative. Excluding this transfer, at 31 December 2019, staffmembers
in the Centre would have been 3 940.
NEDBANK CORPORATE AND
INVESTMENT BANKING
CIB’s HE decreased by 8,1% to R6 167m as the economic
environment worsened in the second half of the year,
and impairments increased off a low base. GOI was maintained
at R15 686m, while expenses were well contained with only a 0,5%
increase despite continued investment in skills and technology.
Economic capital grew by 4,0% notwithstanding the higher level of
advances growth as a result of capital optimisation and increased
RWA efficiencies. ROE decreased to 17,7% due to the decline in HE
and increase in economic capital.
HEADLINE EARNINGS
(Rm)
RETURN ON EQUITY
(%)
8
0
2
5
4
1
0
6
5
1
3
6
4
1
7
6
7
6
1
6
,
6
2
2
1
,
1
2
,
7
0
2
,
0
0
2
,
7
7
1
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
FINANCIAL HIGHLIGHTS
Headline earnings (Rm)
NII (Rm)
Impairments charge on financial
instruments (Rm)
NIR (Rm)
Gross operating income (incl Associate
income) (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses (%)
Cost-to-income ratio (%)
Interest margin (%)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
FINANCIAL HIGHLIGHTS
Gross operating income (incl
Associate income) (Rm)
Average total advances (Rm)
78
NEDBANK GROUP – ANNUAL RESULTS 2019
Corporate and Investment
Banking
Property Finance
Corporate and Investment
Banking, excluding Property
Finance
2019
6 167
7 390
917
8 175
15 686
6 604
17,7
1,15
0,26
123,8
42,1
1,99
543 726
538 064
395 589
381 215
379 656
367 804
34 885
2018
6 714
7 246
103
8 521
15 684
6 572
20,0
1,36
0,04
129,7
41,9
2,12
507 807
494 972
358 639
352 318
348 310
339 676
33 555
2019
1 654
2 106
(32)
1 207
3 313
1 051
16,7
0,9
(0,02)
114,8
31,7
1,12
167 975
159 412
148 473
142 432
268
503
9 921
2018
1 499
2 044
138
1 202
3 246
1 029
17,8
0,81
0,10
116,8
31,7
1,14
155 778
152 578
140 169
140 848
875
781
8 417
2019
4 513
5 284
949
6 968
12 373
5 553
2018
5 215
5 202
(35)
7 319
12 438
5 543
375 751
378 652
247 116
238 783
379 388
367 301
24 964
352 029
342 394
218 470
211 470
347 435
338 895
25 138
Property Finance
Investment Banking
Markets
Working capital and
transactional services
2019
2018
2019
2018
2019
2018
2019
2018
3 313
142 432
3 246
140 848
3 649
174 179
3 972
154 488
5 106
38 724
5 258
32 154
3 618
25 880
3 208
24 828
SEGMENTAL
ANALYSIS
NII increased by 2,0% to R7 390m, with good growth in AIEBA
of 8,8% to R372bn. NIM decreased by 13 bps to 1,99% as asset
margins came under pressure due to competition for high-quality
assets. Average banking advances increased by 6,8% to R346bn,
supported by ongoing drawdowns from previous deals, as well
as a substantial number of new transactions that closed in 2019.
Actual banking advances inclusive of corporate bonds increased
by 9,4% to R393bn underpinned by good growth in the Investment
Banking book following the conclusion of a number of significant
deals. The pipeline for 2020 is healthy with continued drawdowns
of current deals expected. Average deposits increased by 8,3% to
R368bn from growth in call and term deposits.
The CLR at 0,26% is well within our TTC target range of 0,15%
– 0,45%. Impairments increased to R917m (2018: R103m) as
the credit environment deteriorated in the second half of the
year with increased stress in certain industries. Due to early
engagements and initiating restructures of clients in 2018, as well
as no significant new defaulted clients in 2019, stage 3 advances
decreased from R5,7bn to R4,1bn. However, the worsening
environment resulted in increased impairments and a higher
specific coverage ratio against these counters. The portfolio
coverage ratio on the performing book increased from 0,28%
to 0,36% as increased economic pressure resulted in the
deterioration of risk ratings for counters in stressed industries.
We continue to closely monitor stressed sectors of the economy,
such as construction and cement, commercial property clients
with large office/government exposures and parts of the retail
sector. Focus on certain SOEs will continue given ongoing concerns
about the constrained fiscus as well as delays in executing
turnaround plans that continue to be impacted by liquidity and
debt repayment concerns over the medium term. We have
observed an improvement in the governance structure of the
various boards and are encouraged by the appointment of new
independent boards of directors.
NIR decreased by 4,1% to R8 175m largely due to revaluations in
private-equity income as the challenging economic environment
impacted the profitability of certain counters. This was offset by
a good performance in trading income and resilient commission
and fee income. Trading income grew by 2,6% despite low
volatility and decreased volumes from a high base in 2018.
Fee and commission income declined marginally to R3 256m, with
subdued client activity offsetting continued primary-client wins.
The NIR-to-expense ratio decreased to 123,8%.
Efficiencies allowed us to continue to spend on digital
opportunities and upskilling our staff to ensure an ever-improving
client experience. The cost-to-income ratio of 42,1% remains at the
lower end of the SA peer group.
Property Finance
Conditions in the property sector were challenging in line with
the economic environment in SA and the resultant challenges
faced by tenants across all segments. Negative rental
reversions were common across the office and retail segments
as landlords looked to manage vacancies. While some new
developments are taking place in specific nodes, general activity
remains slow and we anticipate this to continue until a sustained
improvement in economic conditions is observed. Gross operating
income increased by 2,1%, driven mainly by NII growth of 3,0% due
to good growth in advances. Actual banking advances, including
bonds, increased by 7,8% to R163bn with an uptick in deals
concluded in the latter part of the year. CLR decreased to -0,02%
from 0,10% and remains below our TTC target range of 0,15%
to 0,35%.
Importantly in this environment, our portfolio contains
good-quality collateralised assets with low average loan-to-value
ratios, underpinned by a large secure asset pool and a strong
client base. The business sustained its strong history of cost
containment, maintaining the cost-to-income ratio at 31,7%.
Property Finance has maintained a leading market share
over many years in SA and seeks to capitalise on this position
by further expansion into the rest of Africa. The business was
announced as the Top African Real Estate Bank of the Year at the
Africa Property Investment Awards.
Investment Banking
Investment Banking was impacted by the deteriorating
environment, with higher impairment charges and negative
mark-to-market adjustments on certain equity exposures. Gross
operating income decreased by 8,1% despite good advances
growth. Actual banking advances, including corporate bonds,
increased by 8,3% due to increased drawdowns and new client
wins. Advances growth will be impacted in 2020 by low GDP
growth, although this will be partially offset by payouts of deals
concluded in the latter part of 2019. The pipeline is fairly robust
across sectors, with an expected uplift as the market cycle turns.
NII increased by 1,2% as a result of advances growth and the
associated endowment income, but was impacted by margin
pressure in a very competitive market for assets. NIR decreased
by 26,6% and was impacted by negative revaluations in the
private-equity portfolio as well as the performance of certain
investments that were converted from debt into equity. Fees
and commissions decreased by 1,9%, noting the 2018 base
year contained fees from renewable-energy deals that were
not repeated in the 2019 financial year. Defaulted exposures
increased due to large counters in the telecommunication,
sugar, construction, cement and retail sectors. The CLR
increased to 0,45% as a result of increased impairments as the
credit environment worsened, causing delays in implementing
restructures as well as putting pressure on asset values.
The business has leading industry expertise in mining and
resources, infrastructure, oil and gas, telecoms and energy, and
ranked number one for debt capital market bond issuances for
2019. In 2019 Investment Banking ranked first by deal flow for
M&A advisors, third by deal value for M&A sponsors and won the
M&A BEE Deal of the Year. The business won the Infrastructure
and Project Finance Deal of the Year 2019 at The Banker Awards,
Sponsor of the Year at the Project Finance International Awards
and was placed first in the Venture Capital/Start-up category
at the Southern African Venture Capital and Private Equity
Association (SAVCA) 2019 Industry Awards.
Markets
GOI in Markets declined by 2,9% due to the decrease in NII
from R1 039m in 2018 to R779m. This was due to decreased
endowment after capital optimisation and declining volumes in
interest-earning funding. Deliberate investment in the Markets
sales and trading franchises is generating growth against
a challenging backdrop characterised by persistently low
volatility and volumes – particularly in the flow-sensitive asset
classes of interest rates and equities. Foreign exchange flows
broadly tracked the weak local economic picture and high
precious-metal prices resulted in an increase in hedging activity
in the commodities space. Market-focused investment over the
past four years is bearing fruit, with trading debt securities, in
particular, growing by 10,3%. There are promising signs appearing
from our recent investment in cash equities, where the breadth
and quality of client engagements, as well as activity, has
increased significantly. The 4% decline in equities was largely
driven by base effects of large once-off derivative transactions
in 2018.
NEDBANK GROUP – ANNUAL RESULTS 2019 79
Transactional Services
GOI increased by 12,8% as a result of strong growth in deposits
enabled by our competitive deposit offerings. Transactional
income was flat, with subdued client activity offsetting the
32 primary-banked-client wins. The income from these new
wins will be realised during 2020 once these new clients are
onboarded with our specialist migration team. Notable wins
include Airports Company South Africa, Supercare and Ekurhuleni
Water Care Company. The transactional business has placed
strategic focus on growing the short-term lending, trade finance
and asset-based finance books through the formation of a
specialised working capital sales team to facilitate additional
deposit growth. The overall environment remains difficult with
impairments increasing and a slowdown in domestic transactional
income, but this has been offset by good growth in trade finance.
Transactional Services continues to deliver on innovation in our
product areas, as well as retain focus on efficiencies, robotics and
API initiatives and solutions in conjunction with selected clients.
Looking forward
Growth prospects for SA are currently expected to improve
slightly in 2020, but will remain sluggish as a result of slow
structural reforms and low business confidence. We are
intensifying our efforts to counteract this through highly
focused client service, as well as providing innovative,
valueadding solutions, coupled with strong relationships to
ensure that CIB remains a strong contender in the market.
We do, however, expect decreased client activity, but this will
be offset by drawdowns in new transactional-client wins and
advances payouts following the significant deals won.
We will focus on leveraging the strengths of our business units,
with maintained momentum in Market’s client acquisitions and
technology drive over the next year. Transactional Banking
will remain focused on client solutions and product innovation,
allowing our clients to manage their various products and
interactions with us in a more effective and digital-friendly
manner. We also seek to capitalise on our leading property
expertise as well as our deep sector knowledge in Investment
Banking, with increased transactions across the continent.
We will also continue to build on our advisory business, as it is a
key enabler to growing NIR.
We are well positioned to use our financial expertise to play
a part in achieving a sustainable future for the country.
In 2019 we concluded the first issuance of a green renewable
bond in SA and we plan to continue to lead in this space by
providing first-to-market products.
Continued cost containment will be aided by creating
efficiencies through optimisation, while still transforming the
business by upskilling our talent and improving technologies
to position us for the future. Developing leadership capability
and building key teams, as well as attracting and retaining
top talent, are significant levers in growing our businesses.
Essential to our strategy is using our strategic partners to
benefit clients on the continent and globally, and expanding
our presence in Africa.
We also continue to emphasise proactive risk management
and focus on resolutions in stressed sectors, while ensuring
that we remain compliant with regulatory requirements.
Over the medium term we are committed to achieving ROE of
≥ 18% and a cost-to-income ratio of ≤ 42% with the long-term
targets set at achieving ROE of ≥ 20% and a cost-to-income
ratio of ≤ 40%.
Favourable
Unfavourable
• Strong advances growth amidst competition for
•
Impairments increased as the credit environment deteriorated.
high-quality assets.
• NIM came under pressure due to competition for
• Expense growth contained to 0,5% despite continued investment in
high-quality assets.
technology and talent.
• Worsening economic environment led to negative revaluations in
•
•
Increase in trading income off a high 2018 base.
private-equity income.
Improved rankings in the M&A league tables and good results at
the annual JSE Spire Awards.
80
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK RETAIL AND
BUSINESS BANKING
OVERVIEW
RBB HE decreased 1,6% to R5 293m, with quality earnings
growth offset by a higher impairment charge. NII was
underpinned by good growth in advances and strong growth
in deposits, although the NIM decreased slightly. NIR growth
was driven by inflation-related price increases and volume
growth. Impairments increased as a result of risk normalisation
off a low base and consumer stress driven by a worsening
macroeconomic environment. Low expenses growth reflected
the impact of optimising processes and operations as well as
lower incentives driven from the lower profits. Economic capital
increased in line with advances growth and this, coupled with the
lower earnings, resulted in a lower ROE of 17,3%.
SEGMENTAL
ANALYSIS
LOOKING AT OUR BUSINESS FROM OUR CLIENTS'
POINT OF VIEW
At the centre of our strategy is our intent to deliver delightful client
experiences. To delight clients we ensure that we are solving real
client problems and pain points by integrating banking seamlessly
into their daily lives. We have launched a client-centred design
capability, combining human-centred design principles and digital
innovations to deliver relevant, easy-to-use and market-leading
solutions, and we are improving our products and services by
leveraging the benefits of technology and increased digitisation.
HEADLINE EARNINGS
(Rm)
RETURN ON EQUITY
(%)
0
6
4
4
0
6
9
4
2
0
3
5
9
7
3
5
3
9
2
5
,
6
6
1
,
9
8
1
1
,
9
1
,
9
8
1
,
3
7
1
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
FINANCIAL HIGHLIGHTS
for the year ended 31 December
Headline earnings (Rm)
NII (Rm)
Impairments charge on financial
instruments (Rm)
NIR (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses (%)
Cost-to-income ratio (%)
Interest margin (%)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
Total Retail and
Business Banking
2019
5 293
19 831
4 823
13 318
20 384
17,3
1,44
1,38
65,3
61,5
5,67
349 396
335 101
338 901
328 272
30 573
2018
5 379
18 692
3 433
12 591
20 032
18,9
1,58
1,06
62,9
64,0
5,69
326 763
312 119
322 520
305 151
28 471
Business Banking
Consumer Banking
Relationship Banking
2019
1 383
4 129
382
1 934
3 724
19,0
0,94
0,50
51,9
61,4
2,83
77 658
75 459
139 603
139 301
7 292
2018
1 462
4 123
117
1 866
3 823
22,2
1,05
0,15
48,8
63,8
2,99
74 287
70 408
139 354
131 800
6 600
2019
2 789
13 238
4 238
7 852
12 726
14,4
1,28
1,95
61,7
60,3
3,72
225 689
217 198
118 872
116 022
19 412
2018
2 884
12 583
3 239
7 496
12 656
15,6
1,34
1,51
59,2
63,0
3,89
216 179
207 557
114 052
108 738
18 495
2019
969
2 556
131
1 465
2 536
32,5
1,20
0,32
57,8
63,1
3,17
44 779
41 041
80 627
72 548
2 980
2018
691
2 215
74
1 274
2 453
27,4
0,98
0,21
51,9
70,3
3,14
37 246
35 122
68 400
64 285
2 520
The total includes unallocated costs relating to Channel, Commercial Issuing and Acceptance, Clients and Shared Services, which are not reflected separately.
NEDBANK GROUP – ANNUAL RESULTS 2019 81
Consumer banking
and other
Relationship banking
Impairments charge on
financial instruments
(Rm)
Consumer banking
and other
Relationship banking
NIR (Rm)
Consumer banking
and other
Relationship banking
Operating expenses
(Rm)
Consumer banking
and other
Relationship banking
Headline earnings (Rm)
Consumer banking
and other
Relationship banking
ROE (%)
CLR – banking
advances (%)
Cost-to-income ratio
(%)
Interest margin (%)
Average total
advances (Rm)
PRODUCT VIEWS, EXCLUDING BUSINESS BANKING
Home Loans
VAF
Unsecured
Lending
Transactional
Card and
Payments
Forex and
Investment
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
NII (Rm)
2 408
2 257
4 315
3 940
3 456
3 206
2 631
2 640
1 454
1 446
1 549
1 327
1 759
649
1 688
569
4 206
109
3 852
88
3 423
33
3 180
26
1 262
1 369
1 437
1 203
1 453
1
1 446
1 109
440
957
370
157
61
96
249
203
46
86
44
42
240
197
43
1 910
1 446
1 372
1 021
1 007
14
1 899
11
712
702
10
1 429
17
667
658
9
1 349
23
707
677
30
41
41
42
42
923
923
766
766
677
5 198
4 885
4 254
4 077
240
649
28
3 920
1 278
3 776
1 109
4 228
26
4 055
22
164
76
193
130
63
1 537
1 489
1 434
1 379
1 624
1 522
7 228
7 418
3 441
3 280
1 430
1 320
1 102
435
680
562
118
13,8
0,12
57,9
1,86
1 063
426
651
547
104
14,3
0,07
59,6
1,85
1 360
74
1 083
1 059
24
14,6
1,81
28,5
3,82
1 312
67
1 168
1 159
9
16,0
1,50
29,9
3,79
1 585
39
832
831
1
22,1
6,16
1 485
37
948
946
2
5 579
1 649
395
5 811
1 607
48
(324)
719
(459)
507
3 425
16
936
928
8
3 265
15
1 076
1 071
5
1 108
322
254
114
140
1 019
301
142
47
95
28,0
13,3
1,9
29,2
36,2
35,0
24,7
124 366 116 823
101 218 93 443
19 546
17 902
117
100
14 658
14 121
5,88
22,08
25,14
5,42
39,0
15,36
39,2
15,71
92,3
5,91
98,6
6,54
60,3
7,87
4,67
59,4
8,31
79,9
1,07
2
86,9
1,00
1
Does not include unallocated costs relating to Channel, Clients and Shared Services, therefore the table does not cross-cast.
Investing in our people to enable them to make a difference in
our clients' experiences remains key. Strong results in the annual
Consulta SA Consumer Satisfaction Index (SAcsi) and BrandsEye
social media sentiment survey showed:
1. For the second year in a row Nedbank posted the largest
improvement in its Net Promoter Score (NPS) among the
top five retail banks and was the only bank to show positive
movement, to 38%, in 2019.
2. Nedbank was rated number one in respect of social media net
sentiment, with a score of 20,4% – the first time the bank has
attained the top position on this important measure.
3. Nedbank’s SAcsi improvement was the largest among the
big five banks. In 2019 Nedbank rose to number two among
the top five retail banks, posting the largest improvement.
This improvement was driven mainly by key metrics such as
perceived value and complaints handling.
4. Nedbank Home Loans outperformed the industry, rising
to number one in respect of client satisfaction. Nedbank
Home Loans also had the best performance in respect of
NPS, placing the bank in second place across the home
loan industry.
Client numbers – Total client numbers remained at 7,5 million, as
declines in acquisition were balanced by improved client attrition.
Approximately 296 000 small-and-medium-enterprise clients
and 14 700 Business Banking client groups are included in this
total. Progress on quality-client acquisition is reflected in an 11,7%
increase in clients who have been main-banked consistently
for the past 12 months (main-banked clients total 2,95 million).
Middle-market, affluent and small-business clients continued to
increase strongly. Entry-level main-banked client growth has
shown a decline (-2,0%); however, entry-level revenue (GOI) growth
remains positive at 5,5%.
Digital innovation – We made significant progress in the past
year, accelerating our digital transformation journey with core
capabilities built to make it easier for our clients to engage with
us. Examples include digital onboarding on the app, the web and
through USSD; eFica; digital credit preapproval using data to
personalise offers for clients; and Client 360 and a marketplace
API, which allows other ecommerce platforms to use our lending
APIs to offer loans. We enjoyed recognition for this by winning two
awards from International Banker for the best innovation in retail
banking in SA and the best client service provider in Africa for
2019. We were also voted the Most Innovative Retail Bank South
Africa 2019 at the Global Banking & Finance Awards®.
82
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
The Nedbank Money app has been downloaded more than
3,9 million times and now offers over 70 client-servicing functions.
Our total digitally active base is now 1,8 million, of which we have
832 000 digitally active clients using the Money app. Functionality
developed through our client-centred design process includes the
ability to: open savings pockets and create goals; chat directly
to a banker using Live Chat; request overdraft and credit card
limit increases; and manage Greenbacks effortlessly, including
redeeming them to invest in unit trusts or buy forex. In line with
our aim to delight our clients by providing them with worldclass
digital experiences, we introduced HeyNed – a market-first digital
concierge in clients' pockets to assist with any non-banking needs
they may have, sourcing deals from over 350 000 suppliers and
negotiating on clients' behalf.
The Nedbank Money app allows new clients to open transactional
accounts without having to submit documents or visit the branch
– a market-leading experience. In addition, existing app users can
open investment accounts and meet their investment needs, and
also access customised offers for personal loans, overdrafts and
credit cards based on individual assessments driven by advanced
analytics and artificial intelligence (AI). Clients also have the ability
to switch their salary and debit orders to their Nedbank accounts
as well as open accounts for their children. Our online banking
platform has 73 digitised client services that empower our clients
to bank using this self-service channel through their personal
devices and include the capability to download stamped bank
statements and tax certificates conveniently.
The small-business segment remains a key focus area and
businesses are now able to register companies with the CIPC
through nedbank.co.za as well as to open a business bank account
online. They can also switch between their personal and business
accounts while logged into the app or online banking for a
seamless and consistent experience.
Commercialisation of data – Data is a critical asset in
Nedbank and an enabler of Nedbank’s strategic focus areas.
While Nedbank is committed to protecting the privacy and
confidentiality of its clients, employees and other associated
parties, managing data effectively has become key to unlocking
client insights, improved personalisation and significantly
improved service levels. The need to understand our clients
better and to retain them more effectively, while providing them
with a range of value-added products, is essential to unlocking
Nedbank’s growth ambitions. We view data commercialisation
as a source of competitive advantage and a necessary step
change in the way we do business going forward.
We are developing a real-time marketing decisioning engine
geared for tailored, relevant, channel-of-choice offers to
optimise processes with improved response rates and cost
savings. We continue to identify automation opportunities to
increase productivity.
Since the inception of the RBB automation centre of excellence
in 2018 we have made good progress in creating a worldclass
robotics process automation (RPA) delivery function and now
have a fully fledged internal delivery team. According to a recent
KPMG independent maturity assessment of the delivery of
automated services, we scored higher than our peers in SA, and
only marginally lower than our international peer group. With
our AI and machine-learning capabilities we have a deeper
understanding of our clients, which helps us to personalise and
customise offerings to meet their needs and serve them better.
Our enhanced RPA enables us to automate manual processes,
improving our speed and accuracy. We have deployed a further
77 robotic solutions across RBB, increasing the total to 125.
Physical distribution – In response to shifts in client behaviour
and preferences we continued to optimise our branch footprint.
For the period under review we closed 21 points of presence
and opened two new branches and four inretailer outlets,
resulting in a net reduction of 15 physical points of presence.
The reduction has not affected our coverage of the bankable
population in SA. We also upgraded 19 branches to our new
format, bringing the total completed upgrades to 379 branches
(64% of total branches). Regarding branch space, we exceeded
our 2020 targeted reduction of 30 000 m2 by achieving an
actual space reduction of 41 516 m2 at 31 December 2019, with
the total branch floor space decreasing by 23% of total branch
space occupied in 2014. In response to the continued increase
in transaction volumes through our self-service channels we
revised our targeted reduction in branch space to more than
49 000 m2 by the end of 2020.
We expanded our ATM footprint with a further 158 devices during
2019. These included 156 cash-accepting ATM devices. During this
period cash dispensed increased by 8%, with 73% of all client cash
at branches now being processed through cash-accepting ATM
devices – an increase from 35% in 2016. Significant progress has
been made in enhancing functionality across self-service and
online channels, providing our clients with enhanced convenience.
Our network of 438 self-service kiosks within our branches enable
our clients to perform a range of self-service transactions,
including ATM limit changes and overseas travel notifications.
We have also launched a functionality that allows clients to open
simple transactional accounts seamlessly using the self-service
kiosk. Client service through branch-located video banking and
contact centre access provides further convenient alternatives
for clients. A further addition to our 24/7 zone in select branches
is a locker to which clients can send their cards or any bank
documents for collection. It also extends beyond banking and
provides clients with a convenient collection point for items
ordered on ecommerce sites such as Takealot or our Unlocked.Me
platform. We plan to roll out more of these to stores across the
country as well as selected Engen garages. We are pleased with
our progress in making it easier and more convenient for clients to
access our services – and at a lower cost.
Our physical footprint reflects both the increased drive towards
client self-service and a diverse SA consumer base that still
requires face-to-face assistance.
Our contact centre is available to clients 24 hours a day. Client
experience and security have been improved through the
deployment of voice biometrics as well as a new online live chat
capability, enabling clients to access services and advice through
text-based interaction with our agents. Non-voice contact centre
interaction now represents 25% of all interactions following the
deployment of multimedia access across our contact centre.
Value propositions – We launched several disruptive CVPs.
These include Unlocked.Me for the youth, delivering banking
value through a zero-monthly-fee account; lifestyle value through
great deals on tech and fashion, such as 50% off laptops; and
assistance to clients in unlocking their career potential with job
search support, including access to up to 500 jobs online. We have
noted good progress in brand awareness and consideration
scores. We are also recording good levels of engagement and
client registrations on the Unlocked.Me platform, with client
registrations now exceeding 100 000. Following the early success
NEDBANK GROUP – ANNUAL RESULTS 2019 83
of the Unlocked.Me Account with students, we have opened
the proposition to all young adults between the age of 16 and
26 years. These are strong foundations on which to grow clients in
the youth segment going forward.
We continued to see sustained growth in our stokvel proposition,
which offers members a market-leading investment account,
funeral benefit, as well as grocery discount benefits. Since
its launch in March 2018, 4 500 stokvels have been banked,
with 155 000 members enjoying benefits. We also launched
a first-in-market, USSD-based onboarding system, allowing
stokvels to onboard themselves to the account anywhere. This
benefit was aimed at ensuring a better client experience for
stokvels, while recognising that the collective makes the decisions
and that this benefit empowers them to do so, in their own spaces.
Our MobiMoney wallet, which allows for client onboarding within
seconds, has seen client numbers grow to 249 000 since its
launch in August 2018. A Youth Employment Service (YES) team of
120 people is fully in-field and has netted over 40 000 MobiMoney
sales. The team has been given sales and client training, as well
as etiquette and social media training. They have also written
comprehensive product tests to ensure that they understand
our products and can be true ambassadors for the Nedbank
brand. To make MobiMoney more inclusive and to provide greater
opportunities for access points consumers can now deposit
money into their MobiMoney wallet at over 9 000 retail store
points in addition to Nedbank ATM points of presence.
Early 2019 saw the launch of the Home-buying Toolkit, a
digital tool that allows Nedbank clients to search for homes,
access property research reports and apply for preapproved
credit conveniently using their cellphones. In July 2019 further
enhancements to the toolkit resulted in an additional digital sales
channel for the business, allowing clients to apply for a home loan
on the Nedbank Money app using a shorter, simplified chat-based
application. This includes prepopulation of clients' contractual
debt information directly from credit bureaus, enabling simpler
and faster completion of the form.
In support of business owners as they start, run and grow their
business, Nedbank relaunched its SimplyBiz® resource platform
with enhanced functionality, including access to a network of
like-minded entrepreneurs, business owners and specialists,
business solutions and special offers; funding advice; and a
marketplace. The platform has approximately 12 000 registered
members.
The top-rated Karri payments app is an innovative solution that
allows parents to make safe, quick and convenient payments
to the school or other community organisation. It continued to
achieve exponential growth in 2019 across all measures, with
strong growth in both active users (up 240% yoy), transactional
value (up 280% yoy) and volume (up 230% yoy). The school
payment app is now used in more than 500 of the top schools in
SA, with a highlight being the recent signup of AdvTech, one of
the largest educational corporate groups in SA. The Karri app
continues to achieve mostly five-star ratings in the app store.
Treating clients fairly and market conduct – Nedbank has been
on a journey to develop a more client-centred culture for several
years. We embrace good market conduct practices and seek to
operationalise our brand promise with the view to consistently
deliver fair client outcomes.
Our Market Conduct and Culture Programme is a systematic
approach that applies a conduct lens to our review of our current
practices. This is used to identify and implement operational
84
NEDBANK GROUP – ANNUAL RESULTS 2019
improvements in the full client journey across all products,
channels and touch points. The programme will continue in
2020 as we incorporate the FSCA draft conduct standards,
together with worldclass conduct practices, to deliver better
client experience.
Marketing – We have aligned our marketing efforts with our
brand purpose, which is to use our financial expertise to do good.
We base our approach on a universal insight that money, when
well managed, can make a real difference in people's lives, as well
as the lives of their family, their business, their communities and
society. Through the creation of a brand world construct, which
came alive through the use of Sbu the cab driver, we have created
better consistency not only in look and feel, but also in messaging
and meaning, which allows us to build strong memory structures
and recall for our brand. We continue to fast-track our data-led
marketing, together with our digital-marketing capabilities,
to be more relevant and connect better with our clients. This
is being demonstrated through data-led, personalised, and
highly targeted messaging at scale, backed by an increase in
digital-marketing spend that is comparable to global industry
norms.
Loyalty and rewards – We successfully launched our new
Greenbacks programme in the second half of 2019. The new
Greenbacks is not just a rewards programme but a money
management programme that prompts, incentivises and rewards
good money behaviours. It incorporates our long-standing
Nedbank Affinity Programme and allows Greenbacks members
to easily support an Affinity of their choice, at no cost to them.
The new programme consists of packages linked to products.
We launched the Card Swiper package (credit card) as well as
the Money Manager package (transactional products) last year,
with Responsible Borrower (lending products) to be launched
in the second quarter of this year. To date we have around
600 000 clients on the new platform and new enrolments are
steadily increasing. The ability for our clients to be rewarded
across these product holdings with Nedbank and not just
their card products, (as was the case with the old Greenbacks
programme), enables improved client retention. In addition, the
digital redemption mechanisms on the Money app (whereby
clients can donate to an Affinity, redeem to invest in unit
trusts, buy airtime, data, electricity or pay service fees) have seen
a significant increase in usage, albeit off a low base.
KEY DRIVERS OF THE 2019 FINANCIAL
PERFORMANCE
NII increased 6,1% to R19 831m and was underpinned by 6,4%
growth in AIEBA and good growth in deposits, while NIM is
marginally down due to mix and the personal-loans business
impact of the NCA-driven reduction in the maximum interest rate.
Average total banking advances increased 7,7% to R348,4bn,
with new-loan payouts increasing to R103,9bn, on the back of
payouts in Consumer Banking, which increased 2,4% to R67,3bn;
Relationship Banking, which increased 9,5% to R9,6bn; and
Business Banking (post internal restructure), which increased 12,6%
to R26,6bn.
Average deposits increased 7,6% to R328,2bn. Our market share
of household deposits declined to 16,9% at December 2019 due
to proactive pricing decisions to ensure an appropriate balance
between margin and volume.
Defaulted advances increased to R21,2bn from R17,3bn in
December 2018, increasing the defaulted book to 5,8% of the
advances portfolio, up from 5,1% in December 2018.
SEGMENTAL
ANALYSIS
Balance sheet impairments rose to 3,87% of total advances
and the coverage on the performing book increased to 0,81%.
Our strategy to grow selected categories of advances ahead of
the market within acceptable risk categories remains.
The CLR, of 1,38%, increased from 1,06% in the previous year to
just within our target range of 1,30% to 1,80%. The traditional
seasonality improvements on impairments in the second half
of the year were offset by the tough economic environment,
particularly in vehicle finance.
NIR increased 5,8% to R13 318m, underpinned by growth in quality
transactional income and revenue from client card issuing (with
combined growth of 6,3% yoy, as well as average product price
increases of 4,5% from 1 January 2019).
Expense growth of 1,8% to R20 384 includes investment in
distribution of R60m and growth in revenue-related costs of
R82m offset by the benefit from IFRS 16 of R104m and reduced
STI and LTI. Additional cost savings of R490m have been delivered
through ongoing, active cost management, with headcount
decreasing by 1 876 to 17 699 since December 2018, achieved
through natural attrition, with retrenchments limited to 145.
We have made significant progress in enhancing operational
efficiencies, unlocking cost savings and improving client
experience by leveraging technologies such as robotics,
AI, machine learning and data analytics as outlined in our
'Commercialisation of data' section above.
Staff Developments
RBB is going through complex changes with regard to
organisational restructure, systems and processes. To cater for
these changes our employees are given face-to-face change
management counselling and provided with change tools
through our portals to access as and when required. Employees
were further engaged through our People expos to manage
the change anxiety and create excitement about working for
Nedbank. This will be further enhanced by our group initiative
People Promise, currently being rolled out across the business.
Our focus has been to prepare for the future skills requirements,
ie digital skills, leadership skills/EQ and other scarce and critical
skills. Training has taken place in classrooms (face to face) as well
as on LinkedIn. As a result, Nedbank won the LinkedIn award for
best digital learning. We have also partnered with various entities,
including the University of Johannesburg, Mail & Guardian, YES
and BANKSETA, to develop and grow pipeline talent, especially
in scarce-skills areas such as data science, analytics, sciences,
technology and the arts.
Our staff composition remains broadly representative of our
society across gender, age and race – EE representation stands
at 80%, women at 67% and millennials at 60% – which contributes
to innovation and diverse thinking. We are focusing on service
excellence as a deliberate training intervention, as we believe that
this will be a lever of differentiation for us going forward. We are
planning to introduce 15 000 to 17 000 employees to this initiative
in 2020.
Looking forward
We remain committed to delivering on our client-centred
growth strategy and boldly executing our plans to deliver
delightful client experiences through digital transformation
using the five strategic levers of Digital First, First in Digital;
Disruptive CVPs; Data-led Sales and Service Excellence;
Loyalty and Rewards; and Data Analytics and Insights.
We have revised our financial targets in context of a
deteriorating macroeconomic environment and aim to
achieve an ROE of ≥ 19% over the medium term (two to three
years); ≥ 20% over the long term (five years or more) and a
substantially lower cost-to-income ratio of less than or equal
to 59% over the medium term and 57% over the long term.
Our focus remains on accelerating financial inclusivity of
our banking propositions to meet evolving client needs
by commercialising existing CVPs and developing new
disruptive CVPs, delivering competitively priced products,
actively reducing transacting costs for our clients through
digital banking services, and tapping into platform-based
propositions to offer beyond-banking solutions. Therefore,
2020 will see us also fast-track rollout of additional
Greenbacks money management features such as
Responsible Borrower.
In the first half of 2019 we rolled out our enterprise
client-onboarding platform (Eclipse) to all frontline users. This
platform provides our clients with a seamless onboarding
experience, the ability to open a transactional account and
apply for a personal loan through a single digital process
(currently more than 95% of all new applications in the branch
are processed through Eclipse) and an additional incentive to
bank with us. This sets us on a great path to digitising our top
10 client journeys, adding more straight-through-processing
and digitising client journeys such as making and receiving
payments and making or opening an investment account using
staff-assisted and self-service channels. We have digitised
114 services to date and are on track to digitise the remaining
70 services across web, app and self-service kiosk channels
to end up with more than 180 digitised services by the end of
2020, as is our goal.
Future distribution investment is aimed at ensuring an
optimal client channel footprint. This will provide more
self-service device options for clients, a marginally reduced
branch footprint, as well as a reformatted strategy aimed at
unlocking more space efficiencies and equipping branches with
self-service capabilities to provide convenient alternatives for
our clients. There is also a focus on quality-client acquisition.
We aim to achieve this through deepening the relationship
with our clients by improving the client experience and
ensuring we have value-adding, cost-effective products that
will drive improvement in our key Net Promoter Score (NPS).
We have launched our new staffed interface for account
opening and servicing, which will further enhance growth in
our transactional banking franchise by reducing the amount
of staff-assisted time required to onboard new clients by
facilitating better cross-selling and client experiences.
Continued focus will also be on equipping our staff to deliver
delightful client experiences. This will be done by rolling out
our People Promise, the Service Excellence programme and
providing staff with data insights toolkits. There has been and
will continue to be focus on building data analytics, RPA, digital
marketing, client-centred design and commercial partnership
capabilities as strategic assets for our business.
Our policies on credit granting have remained consistent and
should ensure relative risk outperformance in the market
through-the-cycle. HE growth should continue to be supported
by various cost efficiency strategies, including the reduction
of the cost to acquire and serve clients through our convenient
and functionally rich mobile and digital channels.
NEDBANK GROUP – ANNUAL RESULTS 2019 85
NEDBANK RETAIL AND BUSINESS BANKING
SEGMENTAL REVIEW
Business transfers
Following an indepth review of industry practices and internal
capabilities, the annual turnover threshold for Business Banking
clients was lifted from R10m to R30m, motivated by a need for
Business Banking to create capacity to focus on larger SMEs,
coupled with a business model in Retail Relationship Banking that
is well geared to serve small businesses with lower complexity.
As a result about 17 000 clients with a turnover of R10m to R30m
were transferred from Business Banking to Retail Relationship
Banking. This has resulted in the following movements for the
period under review:
• R3,9bn in advances (average balance impact of R1,9bn)
• R7,2bn in deposits (average balance impact of R3,6bn)
• R78m in headline earnings for six months
• 7 297 client groups (equivalent to 17 000 client records)
Business Banking
Business Banking (BB) provides relationship-based banking
services to corporates, institutions and parastatals with an annual
turnover of less than R750m but more than R30m. This minimum
limit was lifted from R10m with effect from 1 July 2019 and
clients falling below this threshold have been migrated to Retail
Relationship Banking. Comments below reflect the Core Business
Banking results, restated to be exclusive of the client migration to
enable a like-for-like comparison. Core Business Banking delivered
strong preprovisioning operating profit growth of 14,0%, aided
by savings of R50m achieved through the successful reduction in
headcount as well as judicious cost management practices, also
resulting in an ROE of 18,3%.
Despite the sluggish economic growth that has seen deteriorating
levels of business confidence, with business owners taking a
more cautionary approach to key investment decisions, average
advances growth is up 10,6%, largely due to a 12,6% increase in
new-loan payouts to R26,6bn, coupled with an increase in client
drawdowns of existing facilities as well as new-client acquisitions.
We remain a strong generator of funding, with average total
deposits increasing by 9,0%, giving rise to the generation of
R69,7bn in net surplus funds.
The CLR of 52 bps is at the bottom end of the TTC target range
of 50 bps to 70 bps. However, it is up significantly from the 15 bps
in 2018 and is the main driver of the flat core headline earnings
growth of 0,4%, while preprovisioning operating profit grew by
14,0%. The CLR for 2018 benefitted from significant impairment
releases of R147m following the improvement in the drought
conditions, and when normalising for adjustment, CLR increased
by 15 bps. Downside risk does, however, remain, as we continue
to see the pressure in the operating environment of our clients,
cashflow constraints in the public and private sectors, and general
economic uncertainty driving cautious borrowing behaviour.
Our core CVP is based on the premise of being the trusted
partner for our clients by offering bespoke solutions that
enable their growth aspirations. Through our deep knowledge
and insights about their business and their related industry,
we are able to unlock future possibilities and options that allow
clients to take their business to the next level. This ensures
that our clients benefit from a structured approach combining
relevant, cutting-edge and unique solutions customised to
their business needs.
A full range of banking and financial services includes tailored
CVPs designed especially for the agriculture and franchising
sectors, as well as public sector institutions. Our offering also
includes debtor factoring, fleet solutions, specialised finance and
innovative deposit and transactional solutions for high-volume
and high-value deposit and transactional requirements for
medium and large businesses.
The strategic choice of collaborating with various external
partners, including the public sector, has been enormously
successful, resulting in the award of 18 banking tenders in the
public sector over the past year.
Business Banking is well positioned to support the growth of
SA and our people by enabling business growth through the
delivery of key initiatives to the business sector that will add
to the future sustainability of SA. This includes our investment
in enterprise development, supplier development finance and
creating easier access to finance mechanisms for black-owned
SMEs. We will also continue to focus on delivering delightful client
experiences through the consistent performance of our core
banking propositions. To do so we will continue to leverage our
capability in developing digital advances, which includes providing
machine-learning tools to our frontline client service teams. These
tools offer rich insights into our clients' banking behaviours that
will help the teams deliver enhanced client value. A further focus
will be developing propositions that will unlock new markets and
new revenue streams, including high-end disruption through
the delivery of ecosystem-led CVPs that are enabled by digital
innovation.
Retail Relationship Banking
RRB provides relationship-based banking services to affluent
individuals and their households (salaried and self-employed), to
non-resident clients and embassies, and to SMEs with a turnover
of less than R30m and their business owners.
The relationship banking CVP is designed for clients seeking a
personalised, flexible and proactive approach and caters for
the more complex financial needs typically associated with the
abovementioned segments.
Notwithstanding the benefit from internal client moves mentioned
earlier, the core business performed strongly, delivering on
ROE of 31,7% and remains a significant contributor to the overall
performance of the cluster. A 9,5% increase in loan payouts led
to 11,4% growth in average assets. The average liabilities growth
of 7,3% was slower than in previous years, but the business still
remains a R35bn net funding contributor to the cluster and group.
The CLR has increased from 21 bps to 32 bps; however, this risk
outcome is still well below the TTC target range and once again
confirms RRB's entrenched risk management capabilities and the
high quality of the portfolio.
From a strategic perspective the professional-banking
proposition for the affluent segment provides excellent value
for money and access to exclusive benefits for clients (such as
a dedicated banker for the entire family, unlimited domestic
and 10 international airport lounge visits annually, preferential
investment rates and tailored credit). We are making progress
in building a client base for the future (19% CAGR in young
professional clients over two years), which is compensating for
the generally low switching rates in the established-professional
segment. The Nedbank Money app has been well received in this
market, with more than 70% of potential users having registered.
86
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
Nedbank remains well positioned in the small-business segment,
with urban market share increasing to 22% as a result of positive
perceptions of our ability to understand and serve the needs of
this important sector. We continue to invest in both our banking
offering and support services, including business registration
with the CIPC, issuing of BEE certificates and providing support
through our Simplybiz.co.za platform. From June 2019 business
users (previously registered for Nedbank Internet Banking)
can use the Nedbank Money app, online banking channels and
associated self-service functionality for their business and,
if applicable, toggle seamlessly between their personal and
business profile.
A key focus across both segments is the automation and
fine tuning of our credit assessment and pricing approach to
maximise takeup as well as transactional cross-sell on the back
of these assets. The broader efforts of the bank to create more
self-service functionality, digitise the onboarding processes,
expand the new Greenbacks money management programme
and create a worldclass forex offering will greatly benefit this
business area in coming years.
Consumer Banking
Consumer Banking serves approximately 7,1 million clients in three
primary subsegments, namely youth, entry-level banking and the
middle market. These consist mostly of individuals earning less
than R750 000 per annum, but include some non-individual clients
as well, primarily stokvels, clubs and societies.
Consumer Banking registered strong underlying growth in 2019.
Strong growth in advances and deposits were complemented
by judicious expense management. We saw particularly good
advances growth in emerging-middle-market (13,4%) and
upper-entry-level banking (27,5%). This resulted in preprovisioning
operating profit increasing to 12,8% yoy and the cost-to-income
ratio decreasing to 60,3%. Growth in impairments off a low base
has, however, muted headline earnings growth.
Our focus in Consumer Banking is to be even more client
centred and deliver even better client experiences. We were the
most improved of SA's five retail banks in three measures of
client experience: the Net Promoter Score (NPS), South Africa
Consumer Satisfaction Index (SAcsi) and Social Media Net
Sentiment Score.
Digital has been a huge enabler in improving client experiences.
For example, clients can now easily open an investment product
on the Nedbank Money app and receive preapproved offers
for personal loans, credit cards and overdrafts. We are seeing
exponential growth in the number of clients enjoying these
experiences on the app.
We have implemented a client-centred, opportunity-based
cross-sell strategy to close the gap between us and our
competitors. The strategy is focused on clients’ core banking
needs, and consists of four pillars, namely everyday banking,
lending, savings and protection. Early pilot results were highly
encouraging, and we will be expanding the impact of the
programme across our branch network in 2020.
We have also developed a machine-learning tool to help with
client engagement and cross-selling. This will empower our
frontline sales staff to have more needs-based and more
impactful conversations with clients. We are also putting added
emphasis on switching our lending clients into transactional
relationships, both through targeted client value propositions and
better processes.
Transactional Banking
Transactional Banking provides fully inclusive access to banking
by offering affordable and meaningful banking to clients across
all income levels, enabling financial inclusion and effective money
management through key innovations such as MobiMoney,
Unlocked.Me and savings pockets.
Transactional Banking delivered 3,8% growth in NIR, despite
client transactional volumes migrating to affordable electronic
channels and the launch of zero-fee products. The NIR increase
was driven by new acquisitions and strong growth in the number
of consistently main-banked clients and value-added services.
Lowering our banking fees, specifically in respect of our PAYU
zero-fee product and Unlocked.Me Account, has saved clients
banking fees while giving them significant access to value. Despite
the decrease in transactional clients, we continue to acquire
quality clients, as consistently main-banked clients increased 11,7%.
As part of our digital journey and providing delightful client
experiences, we launched a simplified onboarding process that
enables straight-through processing on most of the transactional
products on the app and online banking. Additional services
added to the app, such as MyPocket, have offered convenience
and improved client experience. These digital solutions, as well
as offerings such as Unlocked.Me and MobiMoney, continued
to contribute towards growth in revenue and the number of
consistently main-banked clients. These digital solutions and
platforms also place Nedbank in a strong position to compete
with new entrants and existing players in the market.
Card and Payments
Card and Payments provides card-issuing, acceptance and
payment products and solutions across all client segments. Card
and Payments offerings include key innovations such as POSplus,
scan to pay, Market Edge™ and GAP Access™.
Card and Payments’ headline earnings were driven by good NIR
growth but was offset by increased impairments that have been
negatively affected by the impact of macroeconomic conditions
and other factors. NIR growth was driven by an increase in
card-issuing volumes of 6% and acceptance of 21%. Competitive
pressures intensified by the arrival of new entrants, changes in
client behaviour and regulation continue to put pressure on NIR
growth. Active cost management remains a focus area, with
ongoing strategic investments being made into payment solutions
and client experience.
Our innovation momentum continues in a landscape that is
experiencing accelerated structural changes driven by regulation,
innovation and disintermediation caused by the arrival of new
entrants. Our innovation agenda is dominated by value-adding
payments and transactions solutions that drive differentiated
and competitive value propositions. New releases include virtual
payments, which increase clients' control over spending as well as
reduce fraud.
As part of our evolved channels, distribution strategy and
commitment to creating great client experiences, we rolled out
our first-in-market card delivery solution through Nedbank
Lockers and at retailers. Nedbank Lockers enable our clients to
collect their cards 24/7 from convenient locations. Our inretailer
card collection solution is the result of a strategic partnership
with retailers to facilitate more accessible and convenient card
collection and banking for our clients. Card Acceptance launched
an instore finance service that provides clients and merchants
with alternative forms of payment and checkout. Additionally,
Nedbank Card has become the joint market leader in the
2019 overall South African Customer Satisfaction Index.
NEDBANK GROUP – ANNUAL RESULTS 2019 87
Forex and investment products
Our purpose is to create investment and forex products that
provide easy and quick client experiences.
Nedbank's market share of household investments contracted
from 19,0% (December 2018) to 17,9% (December 2019), impacted
by our proactive pricing decisions to ensure an appropriate
balance between margin and volume. We are enhancing our
analytics to identify the right prospects to optimise our marketing
and campaigns’ successes.
Following the launch of our online investment capabilities on the
Nedbank Money app and Online Banking, 36% of new accounts
were opened digitally for full-year 2019, compared with 6% in 2018.
For 2019, 53% of notices of withdrawal were submitted digitally,
compared with 35% in the prior year. Account opening is a fully
straight-through process that is an easy experience for the client.
This has resulted in capacity creation inbranch, which will lead to
cost optimisation over time.
We are on the journey to further enhance our online investment
platforms and continue to shift volumes from physical to digital.
We have introduced maturing investments and have progressed
well with the development of Nedgroup Investments products to
be included in the investments product catalogue, which we plan
to launch in the first quarter of 2020.
Several investment value propositions have been enhanced,
including stokvels, tax-free savings accounts, onboarding on
USSD, new tax-free fixed-deposit accounts, the Corporate Saver
third-party funds administration platform and a deposit note
programme at the top end of our commercial base.
With regard to Forex, our aim is to create new and improved
trade and crossborder payment value propositions across all
RBB segments. This includes travel cards, foreign banknotes,
remittances and foreign currency accounts among the
business-related services that enable clients to import and export
with well-managed risks.
We have fully digitised the Travel Card capability on the app
and online banking and continue to focus on digitising other
services, including investing, saving for travel and transferring
funds between Foreign Currency Accounts and the Travel Card.
We have optimised the inward payments processes and will
later in 2020 optimise the outward payments processes which
represent a significant portion of the Forex turnover.
Unsecured Lending
Unsecured Lending provides all segments of Consumer Banking
lending products, which include personal loans, overdrafts and
student loans, but exclude credit cards.
The personal-loans portfolio of R22,7bn represents the majority
(97%) of Unsecured Lending's total advances.
Unsecured Lending headline earnings were negatively impacted
by a R53m decrease relating to the tail end of the impact of
the reduced maximum NCA rate and a R110m decrease relating
to increased impairments due to the negative macroeconomic
forecast, negative collections impact of setoff regulatory change
and risk normalisation to within the target range, in addition to
digital-related expense growth, all of which are offset somewhat
by portfolio growth driving increased revenues and effective
non-digital-related cost management.
Personal Loans average advances increased 13,0%, while
period-end advances were up 10,2% to R22,7bn. New-business
market share in targeted lower-risk segments was 13%, marginally
lower than in the previous year as competition for increased
shares of primary-banked clients intensifies.
The shift to digital continues to gain momentum, as evidenced
by the increased origination contribution from the direct channel
(call centres and digital solution) to more than 32% of total
volumes, driven primarily by the scaling of personal loans in the
Nedbank Money app. More than 20% of personal loans disbursed
to Nedbank clients in the fourth quarter of 2019 were applied for
through this channel, up from < 1% in the prior year. Consumer
Overdraft was introduced in the Money app in the fourth quarter
of 2019, with the app becoming the biggest channel for new
Nedbank overdrafts – three to four times greater than the
branch channel. The same digital experience enabling existing
clients to take up a loan in six clicks and in under three minutes
was also launched across ATMs and kiosks. More offers and
growth in Money app users and other digital channels will continue
to provide material benefits from both a growth and expense
perspective into 2020 and beyond. The number of personal loans
paid into a Nedbank transactional account has increased from
< 70% to about 80% after the scaling of our new client-centred
onboarding system, which enables onboarding of clients for life
through a single digital process, materially reducing turnaround
time. Numerous other new digital products and processes for
both Nedbank and non-Nedbank clients will be launched over the
coming months and are expected to provide further impetus to
digital growth and enhance the market share trajectory for both
Personal Loans and Transactional Banking.
Furthermore, machine-learning techniques have been enhanced
in credit-scoring models, which will, along with embedded risk
and collections excellence, enable sustainable growth within
the current risk appetite while improving client experiences and
assisting in growing our main-banked transactional franchise.
Home Loans
Home loans make homeownership dreams a reality by providing
secured-lending products to the consumer segment, with RRB
and BB providing these products to their segments directly,
leveraging off the Home Loans infrastructure for several of the
administrative processes.
Continued financial pressure on households, coupled with low
consumer confidence, resulted in a subdued housing market
throughout 2019, with the national house price inflation index
increasing by only 1,7%, compared to December 2018 (Lightstone).
Nedbank Home Loans grew new business by 6%, compared with
industry growth of around 4%. Normalising for the migration of
R1,8bn of mortgage balances from Business Banking to Retail
Relationship Banking, HE grew 2,7%, driven by a 6% increase
in NII off the back of book growth of 5,7%, partially offset by
an increase in the CLR to 12 bps, which is below the target
range. The stage 2 portfolio decreased to 10,4% as a result of
amendments made to the SICR partial-arrear methodology.
The stage 3 portfolio increased to 4,6% and has been impacted by
changes in court processes and foreclosure delays. Impairment
coverage on the stage 3 portfolio decreased to 20,03%.
88
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
The business continues to invest in initiatives to drive profitable
growth. These include the following:
• The Home Loans digital channel, which delivered 24% growth in
sales and represented 13% of total sales.
• The Home Loans online portfolio, which added an additional
digital sales channel in July 2019. Clients are now able to
apply on the Nedbank Money app for their home loan, using
a shorter, simplified chat-based application. The app includes
prepopulation of details of clients' contractual debt from credit
bureaus which makes the form much quicker for clients to
complete.
• The Home Loans digital channel 1% cashback initiative, which
continued to reward clients for applying online. Clients are given
1% cash back (capped at R15 000), based on the value of the
loan amount registered. The cashback amount is paid into a
Nedbank salary-funded transactional account.
Continued investment in client experience, resulting in Nedbank
Home Loans outperforming the industry, rising to number one in
respect of client satisfaction. Nedbank Home Loans also had the
best performance in NPS, placing the bank in second place across
the home loan industry in the latest Consulta SAcsi NPS client
satisfaction survey.
We remain committed to helping clients who face financial
hardship and provide a website to educate them about their
options should they fall behind on their home loan repayments.
Since launching the programme in 2009, over 36 780 families
have been able to retain their homes as a result of loan
restructures, with the programme offering an effective
rehabilitation process, and the redefault rate on these loans
being only 18,12%. In addition, over 5 100 financially distressed
clients were given a fresh start through the Nedbank-assisted
Sales programme since the start of this offering in 2009. This
programme gives clients the option to sell their house on the
private market through an estate agent appointed by Nedbank,
thereby allowing them to avoid the repossession and distressed
sale of the house through sheriff auction. Nedbank-assisted Sales
is fast becoming the preferred choice for distressed clients, with
78% of them opting for this in 2019.
MFC
MFC's core business is providing vehicle finance to the consumer
segment through motor dealerships. Used-car finance comprises
70% of the total loan book, which adds an economic buffer when
new-car sales are under sustained pressure. In addition, motor
dealer floor plans (wholesale finance of dealership stock) and key
vehicle distributor joint ventures are housed in MFC.
The automotive industry has had a very challenging 2019 due
largely to a declining economy. The vehicle market contracted by
1% in 2019, with a further decline of 3,5% anticipated in 2020.
Headline earnings were impacted by a higher impairment
charge due to the negative economic climate. This has resulted in
more repossessions and subsequent writeoffs yoy, as well as an
increased number of clients requesting debt counselling.
MFC remains committed to providing a quality service to clients.
The social media launch of the MFC brand in 2019 has seen MFC
providing educational awareness on the car-buying process to
both MFC and non-MFC clients. Strong alliance relationships and
our striving to deliver worldclass digitally enhanced CVPs for our
clients ensure a consistent and sustainable business.
Favourable
Unfavourable
• Landed digital onboarding capability for transactional products
• Cost-to-income ratio and ROE ratio still below peers.
across various channels (enabled through Eclipse rollout).
• Aggressive competitor pricing driving lower household deposit
•
Increased digital product origination.
market share.
• Quality origination across all asset classes at appropriate
• Slowdown in client transacting activity.
• Worsening macro environment driving increase in impairments.
• Economic uncertainty influencing borrowing activity.
• Loss of main-banked market share in the entry-level and
youth segments.
risk-based pricing, driving asset mix benefit and selective market
share gains.
• First in Africa to launch Application Programming Interface (API)
platform in line with international Open Banking standards.
• Leveraged technologies like robotics, AI, machine learning and
data analytics capability to enhance operational efficiencies and
improve client experience.
• Strong lending franchise to drive cross-sell investment into
platform solutions.
• Launched revised money management Loyalty & Rewards
programme to drive desired client banking behaviours.
• Continued, strong improvement in the annual Consulta SA
Consumer Satisfaction Index (SAcsi) survey and NPS scores.
• Received awards for the best innovation in retail banking in SA,
the best customer service provider in Africa and most innovative
retail bank South Africa.
NEDBANK GROUP – ANNUAL RESULTS 2019 89
RETAIL AND BUSINESS BANKING: KEY BUSINESS STATISTICS
Business Banking
New client acquisitions – groups1
Cross-sell product holding1
Home Loans
Number of applications received
Average loan-to-value of new business registered
Average balance-to-original-value of portfolio
Proportion of new business written through own channels
Proportion of book written since 2009
Owned-properties book
MFC
Number of applications received
Percentage of used vehicles financed
Personal Loans
Number of applications received
Average loan size
Average term
Retail deposits
Total value of deposits taken in
Total value of deposit withdrawals
Number of clients at period-end
Retail main-banked clients2
Business Banking groups3
Small Business Services segment4
Home Loans
MFC
Personal Loans
Card issuing
Investment products
Transactional products
Distribution
Number of Business Banking locations
Number of retail outlets
Number of new-image branches5
Number of ATMs6
Number of ATMs with cash-accepting capabilities7
Digitally enabled retail clients
Digitally active retail clients
POS devices
2019
2018
1 087
83 380
1 465
105 548
thousands
%
%
%
%
Rm
thousands
%
thousands
R000s
months
rand billions
rand billions
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
thousands
157
93
77
67
79
28
1 664
70,6
1 380
52,8
41,8
81
80
2 945
14 709
296
295
603
453
1 048
1 501
5 946
63
589
379
4 180
1 232
6 185
1 777
101
148
91
77
59
74
45
1 524
71,1
1 295
52,7
40,2
84
80
2 976
21 538
268
296
589
451
1 024
1 570
5 974
68
604
363
4 022
1 076
5 911
1 544
96
1
Impacted by the client migration to RRB. Excluding this migration the prior-year new client acquisitions (group) and cross-sell product holdings would have been
1 176 and 79 766, respectively.
2 2019 retail main-banked client definition has been revised to include MobiMoney and Card.
3 7 297 client groups migrated to RRB on 1 July 2019.
4 17 000 CISs migrated from BB on 1 July 2019.
5 Included in the number of retail outlets – shown separately for additional disclosure.
6 Includes four corporate cash devices.
7 Cash-accepting devices and interactive teller machines included in total number of ATMs.
90
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
BALANCE SHEET AVERAGE ADVANCES AND IMPAIRMENTS
Daily gross
average
advances
Rm
Stage 1
%
Stage 2
%
Stage 3
%
% of
total advances
Credit loss ratio
%
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Home loans
VAF
Personal loans
Card
Other loans
Total Retail
Business Banking
126 054
105 384
21 143
17 022
2 150
271 753
76 659
118 338
96 152
19 228
16 413
1 865
251 996
71 577
Total RBB
348 412
323 573
85,0
79,5
71,3
85,2
79,6
81,7
87,7
83,0
83,7
80,7
73,2
80,5
75,7
81,4
88,7
83,1
10,4
15,1
11,9
4,3
9,5
12,0
8,0
11,1
12,0
15,0
12,4
8,5
12,0
13,0
4,0
11,8
4,6
5,4
16,8
10,5
10,9
6,2
4,3
5,8
4,4
4,3
14,5
10,9
12,3
5,6
3,4
5,1
35,9
31,1
6,1
4,6
0,6
78,3
21,7
35,9
30,7
5,9
4,8
0,5
77,8
22,2
100,0
100,0
0,14
1,82
6,39
5,42
3,27
1,63
0,50
1,38
0,07
1,48
5,21
4,57
2,92
1,32
0,15
1,06
BALANCE SHEET IMPAIRMENT AS A PERCENTAGE OF BOOK
%
of total
Stage 1
%
Stage 2
%
Performing
stage 3
%
Non-performing
stage 3
%
Total stage 3
%
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Home loans
VAF1
Personal loans
Card
Other loans
Total Retail
Business Banking
Total RBB
1,47
4,09
16,83
13,18
12,59
4,48
1,68
3,87
1,56
3,84
15,44
14,37
16,19
4,4
1,48
3,75
0,20
0,85
3,85
4,27
1,48
0,96
0,33
0,81
0,17
0,72
3,78
3,20
1,80
0,83
0,33
0,71
3,72
7,67
17,07
44,22
24,41
7,69
2,84
6,94
4,05
6,91
15,30
35,33
24,60
7,56
2,99
6,89
15,65
22,42
54,85
14,08
57,32
24,59
14,36
22,82
50,58
10,13
53,19
23,59
24,59
23,59
21,30
65,85
75,61
77,45
84,52
53,38
27,24
47,70
23,65
76,74
80,56
85,34
97,82
59,43
27,7
53,18
20,03
41,78
71,85
72,81
83,57
44,40
27,24
41,65
21,23
51,31
74,54
80,25
95,88
49,16
27,70
45,96
BALANCE SHEET ACTUAL ADVANCES
Total advances
Rm
Stage 1
Rm
Stage 2
Rm
Performing
stage 3
Rm
Non-performing
stage 3
Rm
Total stage 31
Rm
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Home loans
VAF
Personal loans
Card
Other loans
130 455
112 956
22 010
16 817
2 245
121 745
104 248
20 004
16 341
1 755
110 930
89 814
15 699
14 332
1 787
Total Retail
Business Banking
284 483
78 988
264 093
75 400
232 562
69 277
101 862
84 081
14 641
13 160
1 329
215 073
66 886
Total RBB
363 471
339 493
301 839
281 959
13 578
17 027
2 618
720
213
34 156
6 315
40 471
14 553
15 662
2 471
1 395
210
34 291
5 939
1 340
3 390
674
129
9
5 542
1 383
2 122
583
121
9
4 218
40 230
5 542
4 218
4 607
2 725
3 019
1 636
236
12 223
3 396
15 619
3 947
2 383
2 309
1 665
207
10 511
2 575
13 086
5 947
6 115
3 693
1 765
245
17 765
3 396
21 161
5 330
4 505
2 892
1 786
216
14 729
2 575
17 304
1 During 2018 an LGD overlay created in lieu of anticipated modelling changes of R285m was allocated entirely to stage 3. In 2019 this LGD overlay was built into the
model resulting in it being allocated across all stages. December 2018 was therefore inflated and a comparable total stage 3 coverage for VAF would be 47,0%.
NEDBANK GROUP – ANNUAL RESULTS 2019 91
BALANCE SHEET ACTUAL IMPAIRMENTS
Total impairments
Rm
Stage 1
Rm
Stage 2
Rm
Performing
stage 3
Rm
Specific
impairments
Rm
Total specific
impairments
Rm
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
Home loans
VAF
Personal loans
Card
Other loans
Total Retail
Business Banking
Total RBB
1 921
4 620
3 705
2 216
283
12 745
1 330
14 075
1 897
4 001
3 088
2 347
284
11 617
1 114
12 731
225
761
605
612
26
2 229
226
2 455
176
607
554
421
24
1 782
223
2 005
505
1 305
447
319
52
2 628
179
2 807
589
1 082
378
493
52
2 594
178
2 772
210
760
370
18
5
1 363
199
484
295
12
5
995
1 363
995
981
1 794
2 283
1 267
200
6 525
925
7 450
933
1 828
1 861
1 421
203
6 246
713
6 959
1 191
2 554
2 653
1 285
205
7 888
925
8 813
2018
1 132
2 312
2 156
1 433
208
7 241
713
7 954
Income
statement
impairments
charge1,2
Rm
Stage 1
Rm
Stage 2
Rm
Stage 3
Rm
Interest on
impaired
Rm
Postwriteoff
recoveries
Rm
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Home loans
VAF
Personal loans
Card
Other loans
Total Retail
Business Banking
178
1 919
1 351
923
70
4 441
382
86
1 427
1 001
750
55
3 319
105
Total RBB
4 823
3 424
64
154
52
205
3
478
13
491
(27)
(8)
52
5
(2)
20
(96)
(76)
(59)
251
76
(178)
1
91
3
94
(5)
272
67
(9)
4
329
16
345
294
1 963
2 095
1 200
121
5 673
400
6 073
241
1 556
1 550
1 063
101
4 511
202
4 713
(71)
14
(549)
(21)
(23)
(650)
11
(639)
(68)
(1)
(291)
(19)
(18)
(397)
23
(374)
(50)
(463)
(323)
(283)
(32)
(1 151)
(45)
(1 196)
(55)
(392)
(377)
(290)
(30)
(1 144)
(40)
(1 184)
1
Impairment charge and resultant CLR include charges housed centrally within RBB.
2 December 2018 reflects charges associated with debit balances.
92
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
NEDBANK WEALTH
HEADLINE EARNINGS
(Rm)
RETURN ON EQUITY
(%)
2
4
0
1
3
3
1
2
4
0
1
1
3
3
1
1
1
7
4
1
1
7
4
0
5
1
0
5
9
1
3
7
3
3
9
1
3
7
3
3
2
5
2
5
9
2
2
5
2
5
9
2
5
,
1
4
,
2
5
3
,
5
7
2
,
8
6
2
,
8
4
2
Cluster
total
Cluster
Insurance
Insurance
Asset
Management
Asset
Management
Wealth
Management
Wealth
Management
Dec 2019
Dec 2019
Dec 2018
Dec 2018
FINANCIAL HIGHLIGHTS
for the year ended 31 December
Headline earnings (Rm)
NII (Rm)
Impairments charge on financial
instruments (Rm)
NIR (Rm)
Operating expenses (Rm)
ROE (%)
ROA (%)
CLR – banking advances (%)
NIR to total operating expenses (%)
Cost-to-income ratio (%)
Interest margin (%)
Assets under management (Rm)
Life assurance embedded value (Rm)
Life assurance value of
new business (Rm)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
2019
1 042
1 148
57
3 436
3 113
24,8
1,40
0,18
110,4
67,9
2,17
331 136
3 188
421
77 433
74 302
30 741
31 141
40 060
41 072
4 204
2018
1 133
1 113
39
3 484
3 012
26,8
1,69
0,13
115,7
65,5
2,31
297 338
2 786
380
71 142
66 982
31 111
28 908
39 495
37 217
4 225
Nedbank Wealth’s HE declined 8,0% to R1 042m, with ROE at
24,8%, due primarily to the difficult macroeconomic environment
and poor market conditions. Wealth Management experienced
a challenging year, with local revenue significantly impacted
by negative investor confidence and lacklustre GDP growth.
The international Wealth Management business achieved good
underlying growth despite being adversely impacted by declining
interest rates. The Insurance business was negatively affected
by lower life reserve releases and an increase in weather-related
claims in the first half of the year. Asset Management’s
performance was predominantly impacted by AUM outflows
experienced in the latter part of 2018 and a change in investor
behaviour toward lower-margin and lower-risk asset classes.
20151
2016
2017
2018
2019
1 During 2016, the group changed its capital allocation
methodology. The ROE for 2015 would have been 36,7%
using the updated methodology.
NII increased 3,1% to R1 148m, with steady deposit growth in the
international business, partially offset by the declining interest
rate environment in the US, resulting in a decrease in NIM to
2,17%. The difficult local economic environment contributed to
an increase in impairments off a low base, resulting in a slightly
higher CLR of 0,18%.
Negative NIR growth of 1,4% to R3 436m was due to lower
brokerage income and portfolio management fees in the local
Wealth Management business, continued pressure on asset
management fees and a higher non-life claims ratio. This was
partly offset by robust growth in the international Wealth
Management business on the back of increased client activity and
strong growth in AUM.
The NIR-to-expenses ratio declined 5,3% as a result of pressure
on revenue and higher frontline staff expenses. The increase in
costs was due to the international Wealth Management business
building bench strength for future growth, product expansion
in Insurance and investment in innovation and digital initiatives.
Despite this, the business managed to contain cost growth at
3,4%, which is below inflation.
Wealth Management
The local wealth management industry has experienced a
challenging environment, with poor economic growth and
negative investor confidence affecting general trading and
business volumes. Internationally, private banks were impacted
by a decline in US interest rates, prolonged Brexit uncertainty and
competition from ringfenced banks.
Overall Wealth Management HE declined 14,4% to R252m. Poor
local market activity negatively impacted brokerage fees, with
portfolio management fees and commission income declining
due to clients derisking portfolios to lower-margin products.
The international Wealth Management business achieved good
underlying growth in AUM despite difficult macroeconomic
factors.
NEDBANK GROUP – ANNUAL RESULTS 2019 93
The local Nedbank Private Wealth business was named Top
Private Bank and Wealth Manager in SA for ESG/Social Impact
Investing and Philanthropic Advice in the 2020 Euromoney Private
Banking and Wealth Management Survey. Nedbank Private
Wealth International was named Best Boutique Private Bank at
the 2019 WealthBriefing MENA Region Awards.
Asset Management
Muted equity performance across the local asset management
industry over the past three to five years resulted in a change in
the AUM mix to lower-margin and lower-risk products.
Asset Management’s HE declined 5,4% to R319m due to continued
pressure on margins and the full-year impact of a large
institutional outflow in 2018. AUM increased 11,4% to R331bn, with
net inflows of R14,9bn. The low-cost passive business remained
the largest unit trust multiasset passive provider, while cash and
fixed-income assets continued to grow with material net inflows.
At the 2020 Raging Bull Awards, Nedgroup Investments was
recognised as the Top Offshore Manager for the fifth consecutive
year and won the award for the Best global Equity Fund at the
2020 Morningstar award.
Insurance
Insurance HE decreased 6,1% to R471m, driven by higher non-life
claims and lower life reserve releases, partly offset by improved
investment returns. The life portfolio was impacted by actuarial
assumption changes relating to an improvement in mortality for
credit life, worsening mortality for funeral and deteriorating lapse
experience. In the first half of the year the non-life portfolio was
affected by catastrophic weather events resulting in a higher
non-life claims ratio relative to 2018.
Looking forward
We anticipate continued economic headwinds locally, with
negative investor confidence contributing to the derisking
of portfolios to lower-margin products; decreased trading
and general business volumes; and unpredictable weather
patterns. Internationally, strong competition from UK
ringfenced banks is set to further impact lending growth while
interest rates are expected to decline.
Despite this, Nedbank Wealth is continuously exploring
opportunities for growth and will focus on providing innovative,
market-leading client experiences, commercialising digital
capabilities and investing in our people. Given the pressure on
traditional income lines, the business is committed to creating
new revenue streams and managing growth in expenses
through cost containment initiatives.
The local and international Wealth Management
businesses will continue to work together and focus on the
high-net-worth-client strategy, with the goal of moving
from an affluent-banking-led business to a high-net-worth
advice-led business. The businesses will leverage opportunities
within the group, build the Nedbank Private Wealth brand and
embed digital capabilities that enhance client experience.
ASSETS UNDER MANAGEMENT
(Rm)
4
9
9
9
4
1
0
3
7
0
2
8
8
5
9
4
9
3
7
3
2
2
5
5
2
6
5
8
5
0
6
5
2
4
7
9
5
5
4
6
3
1
4
2
8
8
6
6
6
8
4
4
4
6
2
2015
2016
2017
2018
2019
International
Local
Robust growth in life EV of 14,4% to R3 188m was due to strong
VNB and the reduction of acquisition costs, offset by deteriorating
lapse experience. Life VNB increased 10,8% to R421m as a result
of growth in credit life policy sales and higher average funeral
premiums. Non-life gross written premiums remained flat at
R1 180m due mainly to pressure on non-life volumes, offset by an
increase in vehicle value-added product premiums.
Asset Management will focus efforts on delivering excellent
long-term performance and leveraging its Best of Breed™
track record. Continued industry pressure is anticipated, but
the business is well positioned with best-in-class offerings in
the growing global, cash, multiasset and low-cost categories.
Asset Management will continue to invest in digital properties,
grow the international franchise and leverage Nedbank’s
brand and distribution footprint.
Insurance remains committed to enhancing client experience
through expanding its innovative solutions while further
improving data and digital capabilities. The business will
continue to focus on penetrating the Nedbank client base in
line with its bancassurance strategy.
We remain committed to achieving our ROE of greater than
or equal to 28% in the medium term and 30% in the long
term. We have revised our cost-to-income ratio to less than
or equal to 65% in the medium and long term as a result of
structural changes exerting pressure on revenue streams.
To this end we will focus on creating internal efficiencies,
delivering delightful client experiences and building new
income streams.
Favourable
Unfavourable
• Strong AUM growth and steady deposit growth internationally.
• Higher non-life claims ratio.
• Positive net AUM inflows in Asset Management.
• Negative investor confidence and reduced market activity.
• Growth in life VNB.
• Shift in AUM mix towards lower-margin income and cash solutions.
•
Increased penetration into Nedbank VAF.
• Declining USD interest rates.
94
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
ASSETS UNDER MANAGEMENT
Rm
Fair value of funds under management – by type
Unit trusts
Third parties
Private clients
Fair value of funds under management – by geography
South Africa
Rest of the world
Rm
Reconciliation of movement in funds under management – by type
Opening balance at 31 December 2018
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
Closing balance – 31 December 2019
Unit
trusts
Third
party
241 421
550 540
(536 004)
18 497
(1 211)
273 243
839
14
(24)
110
7
946
Rm
Reconciliation of movement in funds under management – by geography
Opening balance at 31 December 2018
Inflows
Outflows
Mark-to-market value adjustment
Foreign currency translation differences
Closing balance – 31 December 2019
South Africa
Rest of
the world
241 364
550 173
(535 803)
8 714
264 448
55 974
10 559
(10 101)
11 420
(1 164)
66 688
2019
2018
273 243
946
56 947
331 136
264 448
66 688
331 136
Private
clients
55 078
10 178
(9 876)
1 527
40
56 947
241 421
839
55 078
297 338
241 364
55 974
297 338
Total
297 338
560 732
(545 904)
20 134
(1 164)
331 136
Total
297 338
560 732
(545 904)
20 134
(1 164)
331 136
NEDBANK GROUP – ANNUAL RESULTS 2019 95
NEDBANK AFRICA REGIONS
Although sub-Saharan Africa GDP growth was mixed in
2019, it continues to grow faster than that of SA and provide
opportunities for diversifying earnings and returns over the
longer term. GDP growth in most of the SADC countries in which
we operate was more than 1,0%; Mozambique grew at 3,0%.
Our strategy remains to own, manage and control banking
operations in SADC and East Africa, and to provide our
clients with access to a banking network in West and Central
Africa through our strategic investment in and alliance
with the pan-African banking group ETI, which operates in
36 African countries.
SADC SUBSIDIARIES
Our SADC subsidiaries’ performance was impacted by several
unusual items. Policy uncertainty, increased government
expenditure and a lack of foreign direct investments have
severely damaged the Zimbabwean economy, contributing to
hyperinflationary conditions. By year-end the CPI inflation index
reached 552. Zimbabwe officially adopted hyperinflationary
accounting effective 1 July 2019 with an overall HE impact
of R186m.
HEADLINE EARNINGS
(Rm)
RETURN ON EQUITY
(%)
1
9
6
2015
)
0
1
8
(
)
7
8
2
(
2016
2
0
7
7
5
4
2018
2019
2017
FINANCIAL HIGHLIGHTS
Headline earnings (Rm)
NII (Rm)
Impairments charge on financial
instruments (Rm)
NIR (Rm)
Operating expenses (Rm)
Associate income
ROE (%)1
ROA (%)
Return on cost of ETI investment (%)
CLR – banking advances (%)
NIR to total operating expenses (%)
Cost-to-income ratio (%)
Interest margin (%)
Total assets (Rm)
Average total assets (Rm)
Total advances (Rm)
Average total advances (Rm)
Total deposits (Rm)
Average total deposits (Rm)
Average allocated capital (Rm)
,
2
0
1
2015
,
)
6
3
(
2016
,
)
6
2
1
(
,
3
0
1
7
7
,
2018
2019
2017
Total Africa Regions
SADC
2019
457
1 547
233
1 220
2 427
672
7,7
1,19
10,7
1,01
50,3
70,6
5,01
38 385
37 641
21 678
21 959
30 223
30 780
5 943
2018
702
1 627
113
1 206
2 416
611
10,3
1,79
9,7
0,51
49,9
70,2
5,25
37 518
39 123
21 037
21 866
29 472
30 263
6 812
2019
20
1 868
233
1 220
2 427
4
0,4
0,06
1,01
50,3
78,5
7,00
35 711
34 738
21 678
21 959
30 223
30 780
5 094
2018
327
1 951
113
1 206
2 416
3
5,6
1,03
0,51
49,9
76,5
7,27
34 273
36 042
21 037
21 866
29 472
30 263
5 815
ETI
2019
437
(321)
668
52,0
6,20
10,7
2018
375
(324)
608
37,7
5,19
9,7
2 674
2 903
3 245
3 081
849
997
1 FY2019 ROE on subsidiary and associate incountry statutory capital is 4,9% (2018: 8,9%), with Namibia 13,1% (2018:13,3%); Eswatini 14,6% (2018: 17,9%); Lesotho 10,7%
(2018: 15,1%); Malawi -58,9% (2018: -7,2%); Zimbabwe -57,2% (2018: -27,8%) and Banco Único 13,5% (2018: 12,9%).
96
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
Once-off tax adjustments and non-operational writeoffs
reported in H1 2019, reduced HE by R61m thereby contributing to
the poor performance.
These new products and services have been well received in their
respective markets and we expect an improved performance
going forward.
We continue to build a strong core business to deliver an improved
performance into the future. The business had a marginal
decline in client numbers, due mainly to new account closure rules
introduced mid-2019. Notwithstanding this, revenue per client
rose by 4,5% as we acquired quality clients and deepened client
relationships. Client retention in retail improved as we improved
our digital transactional and lending client value propositions.
In line with transforming our business for a digital age, we
registered a 94% increase in our active app users and grew the
number of point-of-sale (POS) devices by 27%, resulting in a 10%
increase in merchant turnover to R9bn.
Headcount decreased by 1% to 2 582, while our branch footprint
increased by 5% to 103 and the number of ATMs declined by 1%.
In our markets our branch and ATM footprint is much lower than
that of our key competitors and new investments are limited to
high-growth micro markets and the minimum required presence
by regulation. The decline in ATMs is due to optimisation of our
footprint and driving our POS cash-back strategy.
We continued investing in our businesses to give our clients
improved offers and client experiences. Some of the initiatives
included the following:
• Rolling out the award-winning Nedbank Money app offering
to our businesses in Lesotho, Namibia, Malawi and Eswatini.
The new Money app (Africa) had an additional 49 new features
compared to the old Nedbank App Suite (Africa); in Zimbabwe,
we also enhanced our mobile solution.
• Launching a new pay-as-you-go account in Namibia, targeting
the entry-level and middle-market client segments. This was
part of making our solutions simpler and more convenient for
our clients while understanding that these clients are interested
in managing and controlling their overall banking costs.
• Automating the overall business to improve efficiency and client
service.
Branches
BRANCHES
ETI (WEST AND CENTRAL AFRICA)
ETI’s financial recovery continued albeit with earnings growth
slowing. The performance is driven by sustained recovery from
three regions, offset by ongoing poor performance from the
Nigerian franchise. The performance for the nine months
to 30 September 2019 has been driven by the following:
• Strong earnings growth and good returns were registered in
the Anglophone West Africa and Francophone West Africa
regions reflecting the quality of the franchise.
• The recovery in the financial performance in the Central,
Eastern and Southern Africa (CESA) region continued.
• Nigeria’s performance deteriorated further, due to persistently
elevated NPLs, adverse regulatory intervention and ongoing
economic headwinds.
The collaboration between ETI and Nedbank continued during the
year, with some business opportunities between the two groups
yielding positive results. We continued to increase the number
of Nedbank wholesale clients doing their transactional banking
with ETI to 118 from 110 in 2018. More than 245 accounts have been
opened at Ecobank businesses across the continent. We have also
continued to grow treasury activities.
Financial highlights
Africa Regions delivered HE of R457m, a 35% decrease from 2018,
and produced an ROE of 7,7%. This performance was primarily
impacted by the poor results from Zimbabwe.
In ETI, the financial recovery has continued with sustained
profitability albeit at a slower growth rate. Associate income
from ETI was R668m, growing by 10%, while HE grew by 17% to
R437m.
ATMs
ATMS
2
8
7
8
3
9
8
9
3
0
1
1
7
1
4
8
1
8
0
2
0
2
2
8
1
2
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
NEDBANK GROUP – ANNUAL RESULTS 2019 97
This result reflects the sustained strong performance from
ETI’s core West African operations, including Côte d’Ivoire and
Ghana; a recovery in Central, Eastern and Southern Africa’s
business performance; while the Nigerian business continued to
underperform.
Our SADC banking subsidiaries had a mixed performance amid
a challenging macroeconomic environment. HE declined by 94%
to R20m, largely driven by losses in Nedbank Zimbabwe as a
result of a hyperinflationary environment and once-offs. Excluding
Nedbank Zimbabwe, the HE of our SADC operations grew
by 0,6%.
Notwithstanding the challenging macroeconomic environment,
average gross advances grew by 0,3% and, excluding Zimbabwe,
by 3,6%. Average deposits grew by 2,0%, excluding Zimbabwe at
11,1%. NIM declined by 27 bps, reflecting the competitive conditions
in the market. NIR increased by 1,2% in an environment of limited
fee increases, reflecting our focus on acquiring primary-banked
clients. Excluding Zimbabwe, NIR grew by 5,1%.
The CLR increased to 101 bps due to a significant increase in
impairments from R113m to R232m, marginally breaching the
upper limit of our CLR target of 100 bps. Excluding unusual
recoveries in the prior year our CLR is in line with 2018.
Expenses have been well managed and only increased by 0,5% to
R2 427m, underpinned mainly by the management of headcount
growth and other costs. Our cost-to-income ratio increased
by 2,7% to 78,5%; excluding Zimbabwe the cost-to-income ratio
was 80,4%.
Looking forward
Sub-Saharan Africa GDP is expected to grow by 3,5% in
2020, which is a slight improvement on the 3,3% growth
in 2019. Nedbank remains committed to long-term and
profitable growth in our Africa Regions business and seeks
to leverage these growth opportunities. Our ambition is to
give our clients access to the best financial services network
in Africa and we will deploy capital to optimise returns for the
group. Despite a challenging macroeconomic environment,
we expect Africa Regions to be a positive contributor to
group earnings.
In SADC, for 2020, we expect earnings to improve off a low
base, with continued difficult economic conditions in SA spilling
over to growth in the southern Africa region. We will adapt
our businesses to the new economic normal to drive stronger
revenue growth through:
•
investing in digitisation and automation to be
more competitive;
• continuing to focus on credit risk management and a
stronger control environment;
• tapping into Mozambican growth opportunities; and
• reconfiguring the shape of balance sheet and business
operations in Zimbabwe.
Our focus will remain on the delivery of the ETI board-driven
strategic agenda, commercialisation of collaboration initiatives
and the increase of business flows.
Our financial outlook in the next two to three years is to deliver
returns greater than 15% and cost-to-income of below 65%.
Over the long term, greater than five years, we aim to deliver
ROEs above 20% and cost-to-income less than 60%.
Favourable
Unfavourable
• ETI financial performance improved but growth slowing.
• Difficult economic conditions most of our markets.
• Revenue per client increased.
• Cost grew by less than inflation.
• Developed new CVPs enabling growth in transactional clients,
assets and deposits.
• Nedbank Zimbabwe negatively affected by hyperinflation
resulting an a headline loss of R108m (2018: profit of R142m).
• Once-off tax adjustments and non-operational writeoffs in H1.
• CLR increased due to challenging economic environment.
• Challenging environment for ETI in Nigeria.
98
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL
ANALYSIS
GEOGRAPHICAL SEGMENTAL REPORTING
for the year ended 31 December
Rm
2019
2018
2019
2018
2019
2018
2019
2018
Nedbank Group
South Africa1
Rest of Africa2
Rest of world
Summarised statement of financial
position
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government and other securities
Loans and advances
Other assets
Intragroup assets
37 635
64 451
35 243
128 510
796 833
80 677
–
34 791
79 362
22 692
96 791
736 305
73 971
–
29 655
42 562
35 075
126 171
722 532
70 739
(499)
27 763
58 537
22 525
94 329
669 363
64 398
(497)
6 341
4 083
38
848
21 678
4 898
499
Total assets
1 143 349
1 043 912
1 026 235
936 418
38 385
Equity and liabilities
Total equity
Derivative financial instruments
Amounts owed to depositors
Provisions and other liabilities
Long-term debt instruments
Intragroup liabilities
98 449
27 991
904 382
52 814
59 713
–
91 271
20 003
825 804
51 247
55 587
–
81 926
27 913
812 008
49 922
59 396
(4 930)
74 727
19 913
747 532
49 474
55 259
(10 487)
5 943
11
30 223
1 891
317
5 615
4 776
10
668
21 037
4 915
497
37 518
6 812
12
29 472
894
328
Total equity and liabilities
1 143 349
1 043 912
1 026 235
936 418
38 385
37 518
Summarised statement of
comprehensive income (Rm)
NII
Impairments charge on financial
instruments
Income from lending activities
NIR
Operating income
Total operating expenses
Zimbabwe hyperinflation
Indirect taxation
Profit/(Loss) from operations
Share of income/(losses) of
associate companies
Profit before direct taxation
Direct taxation
Profit after taxation
Profit attributable to
non-controlling interest
Headline earnings
1
Includes all group eliminations.
30 167
28 819
27 548
26 331
6 129
24 038
25 997
50 035
32 179
296
1 096
16 464
793
17 257
3 942
13 315
809
12 506
3 688
25 131
25 976
51 107
31 632
–
942
18 533
528
19 061
4 807
14 254
759
13 495
5 824
21 724
23 598
45 322
28 940
1 014
15 368
121
15 489
3 885
11 604
777
10 827
3 642
22 689
23 829
46 518
28 505
894
17 119
(83)
17 036
4 649
12 387
606
11 781
1 547
233
1 314
1 220
2 534
2 427
296
58
(247)
672
425
(64)
489
32
457
1 627
113
1 514
1 206
2 720
2 416
37
267
611
878
23
855
153
702
1 639
17 806
130
1 491
52 623
5 040
1 413
16 049
157
1 794
45 905
4 658
78 729
69 976
10 580
67
62 151
1 001
4 930
78 729
1 072
72
1 000
1 179
2 179
812
24
1 343
1 343
121
1 222
9 732
78
48 800
879
10 487
69 976
861
(67)
928
941
1 869
711
11
1 147
1 147
135
1 012
1 222
1 012
2 The Rest of Africa geographical segmental income statement and balance sheet consist of the SADC banking subsidiaries and the investment in ETI. These
statements do not include transactions concluded with clients resident in the rest of Africa by other group entities within CIB nor transactional banking revenues.
For example, CIB has credit exposures to clients resident in the rest of Africa of R35,1bn (December 2018: R27,7bn).
NEDBANK GROUP – ANNUAL RESULTS 2019 99
INCOME STATEMENT ANALYSIS
101
Net margin analysis
105
Impairments
108
Non-interest revenue
110
Expenses
112 Non-trading and capital items
112
Taxation charge
112 Preference shares
113 Hyperinflation
100
NEDBANK GROUP – ANNUAL RESULTS 2019
1 NET MARGIN ANALYSIS
Nedbank Group
Closing average interest-earning banking assets
Opening NIM/NII
Growth in banking assets
Endowment
Capital, net of working capital
Deposits
Asset margin pricing and mix
Impact due to pricing
Impact due to mix change
Liability margin pricing and mix
Deposits pricing and mix
Impact due to pricing
Impact due to mix change
Enhancing funding profile
Prime – JIBAR basis
HQLA
IFRS 9: Financial instruments
IFRS 16: Leases
Other
Closing NIM/NII for the year
NET INTEREST MARGIN (YOY)
(Bps)
(3)
(6)
365
INCOME STATEMENT
ANALYSIS
2019
Bps
365
(3)
(3)
(4)
(6)
2
1
(1)
1
(2)
(4)
(1)
Rm
857 981
28 819
2 465
(268)
(226)
(42)
(357)
(555)
198
31
62
123
(61)
(31)
77
(204)
(293)
(103)
352
30 167
2018
Bps
362
(2)
(2)
4
3
1
1
(2)
(2)
3
(1)
(1)
Rm
790 376
27 624
987
(184)
(146)
(38)
340
224
116
99
(169)
(159)
(10)
268
(100)
(49)
(21)
2
365
123
28 819
352
2
1
(1)
1
(2)
(4)
(1)
2018
Endowment
impact
Asset
pricing
Asset
mix
Liability
pricing
Liability
mix
Prime – JIBAR
basis
HQLA
IFRS 16
Other
2019
NEDBANK GROUP – ANNUAL RESULTS 2019
101
NET INTEREST INCOME
(Rm)
INTEREST MARGIN TRENDS VERSUS PRIME RATE
(%)
10,4
10,4
10,1
10,1
9,4
5
8
8
3
2
6
2
4
6
2
4
2
6
7
2
9
1
8
8
2
7
6
1
0
3
0
3
3
,
4
5
3
,
2
6
3
,
5
6
3
,
2
5
3
,
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Nedbank Group NIM
Average prime rate
NET INTEREST INCOME
Favourable
Unfavourable
• Positive mix changes due to stronger growth in RBB average
• Negative endowment impact due to lower net endowment
advances with higher margins, compared with slower growth in
CIB average advances with lower margins.
• Liability rate benefit as a result of improved pricing on fixed
deposits.
balances.
• A decline in the Personal Loans margin due to the treatment
of interest on the stage 3 portfolio and the extended writeoff
period as well as the impact of NCA pricing caps.
• Widening of the prime – JIBAR spread in 2019 versus 2018.
• Competitive pricing on wholesale advances.
• Negative liability mix due to stronger growth in wholesale
sources of funding.
• The implementation of IFRS 16 resulted in an interest expense
on the lease liability for operating leases being included in NII.
Previously, operating lease expenses were included in total
operating expenses.
• Higher levels of low-yielding HQLA held in the banking book.
NII SENSITIVITY ANALYSIS
• At December 2019 the NII sensitivity of the group’s banking book for a 1% parallel reduction in interest rates, measured over 12 months,
was 1,54% of total group ordinary shareholders’ equity, which is below the board’s approved risk limit of < 2,25%.
• This exposes the group to a decrease in NII of approximately R1 346m before tax, should interest rates decrease by 1% across the yield
curve, measured over a 12-month period. Nedbank London and Wealth International NII sensitivities are, however, measured at a 0,5%
instantaneous decrease in interest rates.
• The group’s NII sensitivity exhibits very little convexity and will therefore also result in an increase in pretax NII of approximately similar
amounts should interest rates increase by 1%.
• The group’s NII sensitivity is actively managed through on- and off-balance-sheet interest rate risk management strategies for the
group’s expected interest rate view and impairment sensitivity over the cycle.
102
NEDBANK GROUP – ANNUAL RESULTS 2019
INCOME STATEMENT
ANALYSIS
LENDING SPREAD VERSUS CREDIT LOSS RATIO (INCLUDING TARGET RANGE) OF NEDBANK GROUP
(Bps)
254
238
231
240
241
Δ = 177
Δ = 170
Δ = 182
Δ = 187
Δ = 159
77
2015
68
2016
49
2017
53
2018
82
2019
Lending spread (banking financial assets)
Credit loss ratio (CLR)
Current CLR target range (60–100 bps)
• The group’s lending spread increased by 1 bp in the current year to 241 bps. This was primarily due to positive advances mix changes, with
RBB average advances growing faster than CIB average advances.
• The group’s CLR increased by 29 bps yoy to 82 bps at 31 December 2019, which is within the group TTC target range of 60 bps to 100 bps.
NEDBANK GROUP – ANNUAL RESULTS 2019
103
AVERAGE BANKING STATEMENT OF FINANCIAL POSITION AND RELATED INTEREST
2019
2018
Average
balance Margin statement interest1
Average
balance
Margin statement interest1
Rm
Assets
Received
Average prime rate
Assets
Loans and advances
Home Loans (including properties in
possession)
Commercial mortgages
Instalment debtors
Credit card balances
Overdrafts
Term loans and other2
Personal loans
Impairment of loans and advances
Government and public sector securities
Short-term funds and trading securities
Interest-earning banking assets
Other3
Total assets
159 406
170 087
121 231
17 378
22 954
229 811
23 907
(16 297)
84 501
45 003
857 981
106 974
964 955
15 073
16 369
14 277
2 581
2 373
18 358
5 151
7 162
2 336
83 680
83 680
%
10,14
9,46
9,62
11,78
14,85
10,34
7,99
21,55
8,48
5,19
9,75
8,67
Assets
Received
152 545
161 473
112 521
16 621
20 052
212 525
21 219
(14 383)
53 134
54 669
790 376
96 537
886 913
14 314
15 581
13 099
2 461
2 081
17 582
4 764
4 388
3 271
77 541
(1 600)
75 941
Liabilities
Paid
%
Liabilities
Paid
Equity and liabilities
Deposit and loan accounts
Current and savings accounts
Negotiable certificates of deposit
Other interest-bearing liabilities 1,4
Long-term debt instruments
Interest-bearing banking liabilities
Other5
Total shareholders’ equity and liabilities
Interest margin on average
interest-earning banking assets
456 578
111 379
117 088
85 887
57 306
828 238
136 717
964 955
30 628
1 074
9 259
7 214
5 338
53 513
53 513
857 981
30 167
6,71
0,96
7,91
8,40
9,31
6,46
5,55
3,52
427 747
107 761
104 236
66 586
53 810
760 140
126 773
886 913
28 469
1 016
8 236
5 885
5 116
48 722
(1 600)
47 122
790 376
28 819
%
10,09
9,38
9,65
11,64
14,81
10,38
8,27
22,45
8,26
5,98
9,81
8,56
%
6,66
0,94
7,90
8,84
9,51
6,41
5,31
3,65
1 Yields are before incorporating the impact of hedging derivatives.
2 Includes term loans, preference shares, factoring debtors, interest on derivatives and other lending-related instruments.
3 Includes cash and banknotes, derivative financial instruments, insurance assets, associates and investments, property and equipment, mandatory reserve deposits
with central banks, intangible assets, other assets and elimination entries.
4 Net interdivisional assets – trading book, previously disclosed as a negative in the other non-interest-earning banking assets, now included in other interest-bearing
liabilities.
5 Includes derivative financial instruments, investment contract liabilities, other liabilities and elimination entries.
104
NEDBANK GROUP – ANNUAL RESULTS 2019
2 IMPAIRMENTS
INCOME STATEMENT
ANALYSIS
NEDBANK GROUP IMPAIRMENTS
CHARGE
(Rm)
NEDBANK GROUP CREDIT LOSS RATIO
TRENDS
(%)
1,00
10,4
10,4
10,1
0,60
9
8
7
4
4
5
5
4
4
0
3
3
8
8
6
3
9
2
1
6
7
7
0
,
9
6
0
,
9
4
0
,
3
5
0
,
2
8
0
,
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
CLR
Upper range
Lower range
NEDBANK GROUP INCOME STATEMENT IMPAIRMENT CHARGE AND CREDIT LOSS RATIO
December 2019 (Rm)
Rm
Rm
Rm
Stage 1
Stage 2
Stage 3
Corporate and Investment
Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail1
Wealth
Africa Regions
Centre
Nedbank Group
(1)
30
(31)
476
13
463
(1)
71
254
179
75
102
7
95
4
23
99
616
693
(77)
4 241
369
3 872
54
129
545
482
5 040
1 For further disaggregation, refer to the RBB segmental report on page 92.
Off-
balance-
sheet
Impairment
charge, net of
recoveries
Mix of
average
banking
advances
CLR
Target
Rm
46
46
4
(8)
12
6
56
Rm
%
%
%
917
949
(32)
4 823
382
4 441
57
233
99
46,3
27,2
19,1
46,5
10,2
36,3
4,2
3,0
0,26 0,15 – 0,45
0,45
(0.02) 0,15 - 0,35
1,38 1,30 – 1,80
0,50 0,50 - 0,70
1,63 1,60 - 2,40
0,18 0,20 - 0,40
1,01 0,75 - 1,00
6 129
100,0
0,82 0,60 – 1,00
Non-
LAA
Rm
2
1
1
–
4
6
December 2018 (Rm)
Corporate and Investment
Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Africa Regions
Nedbank Group
Stage 1
Rm
Stage 2
Rm
Stage 3 Non-LAA
Rm
Rm
Off-
balance-
sheet
Rm
Impairment
charge, net of
recoveries
Rm
Mix of
average
banking
advances
%
142
96
46
(76)
(96)
20
108
174
(399)
(420)
21
344
16
328
(5)
(4)
386
315
71
3 155
185
2 970
44
15
(64)
3 600
5
5
–
5
(31)
(31)
10
12
(2)
(6)
(27)
103
(35)
138
3 433
117
3 316
39
113
46,5
26,2
20,3
46,3
10,2
36,1
4,2
3,2
CLR
%
Target
%
0,04 0,15 – 0,45
0,01
0,10 0,15 - 0,35
1,06 1,30 – 1,80
0,15 0,50 - 0,70
1,32 1,60 - 2,40
0,13 0,20 – 0,40
0,51 0,65 – 1,00
3 688
100,0
0,53 0,60 – 1,00
NEDBANK GROUP – ANNUAL RESULTS 2019
105
Favourable
Unfavourable
• While impairments have increased significantly off a low base,
the CLR remains around the midpoint of our target range.
• The adverse macroeconomic environment continued to place
pressure on corporates and consumers.
• The portfolios secured by mortgage bonds continue to perform
well with CLRs for Home Loans and Property Finance at 0,07%
and negative 0,02%, respectively.
• High delinquency levels increased impairments by 66,2% to
R6 129m.
• The RBB portfolio deteriorated due to higher distressed
restructures in MFC and poor collections in December 2019.
1,39
0,23
0,19
0,17
Nedbank Group credit loss ratio per cluster
(%)
NEDBANK GROUP CREDIT LOSS RATIO PER CLUSTER
(%)
1,25
1,14
0,40
0,15
1,12
0,98
0,34
0,08
2015
2016
1,06
1,02
0,09
0,06
2017
1,06
0,51
0,13
0,04
2018
CIB
RBB
Wealth
Africa Regions
1,38
1,01
0,26
0,18
2019
NEDBANK GROUP IMPAIRMENT DRIVERS
(Rm)
1 440
1
83
546
371
3 688
6 129
2018
Stage 1
Stage 2
Stage 3
Non-LAA
2019
Off-
balance
-sheet
106
NEDBANK GROUP – ANNUAL RESULTS 2019
INCOME STATEMENT
ANALYSIS
IMPAIRMENT CHARGE OF FINANCIAL INSTRUMENTS
December 2019 (Rm)
ECL allowance – opening balance
Stage 1
Stage 2
Stage 3
Statement of comprehensive income
charge net of recoveries
Stage 1
Stage 2
Stage 3
Non-loans and advances
Off-balance-sheet allowance
Adjusted for:
Recoveries
Interest in suspense
Amounts written off/Other transfers
ECL allowance – closing balance
Stage 1
Stage 2
Stage 3
Split by measurement category
Loans and advances
Loans and advances in FVOCI
Non-loans and advances
Off-balance-sheet allowance
December 2018 (Rm)
ECL allowance – opening balance
Stage 1
Stage 2
Stage 3
Statement of comprehensive income
charge net of recoveries
Stage 1
Stage 2
Stage 3
Non-loans and advances
Off-balance-sheet allowance
Adjusted for:
Recoveries
Interest in suspense
Amounts written off/Other transfers
ECL allowance – closing balance
Stage 1
Stage 2
Stage 3
Split by measurement category
Loans and advances
Loans and advances in FVOCI
Non-loans and advances
Off-balance-sheet allowance
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Group
Nedbank
Africa
Regions
Wealth
Centre
15 845
2 889
3 587
9 369
6 129
545
482
5 040
6
56
(3 795)
1 247
723
(5 765)
18 179
3 455
3 932
10 792
18 179
17 534
340
34
271
1 866
601
548
717
917
(1)
254
616
2
46
(37)
20
83
(140)
2 746
659
768
1 319
2 746
2 217
340
8
181
12 796
2 042
2 791
7 963
4 823
476
102
4 241
4
(3 475)
1 196
640
(5 311)
14 144
2 507
2 819
8 818
14 144
14 075
69
187
25
22
140
57
(1)
4
54
(15)
(15)
229
24
25
180
229
229
816
220
78
518
233
71
23
129
4
6
(269)
31
(300)
780
249
72
459
780
749
9
22
Corporate
and
Investment
Banking
Retail and
Business
Banking
Nedbank
Group
Nedbank
Africa
Regions
Wealth
14 447
2 806
3 886
7 755
3 688
174
(64)
3 600
5
(27)
(2 290)
1 271
434
(3 995)
15 845
2 889
3 587
9 369
15 845
15 488
122
25
210
2 040
456
910
674
103
142
(399)
386
5
(31)
(277)
26
40
(343)
1 866
601
548
717
1 866
1 603
122
6
135
11 320
2 106
2 739
6 475
3 433
(76)
344
3 155
10
(1 957)
1 185
394
(3 536)
12 796
2 042
2 791
7 963
12 796
12 731
65
160
39
10
111
39
(5)
44
(12)
(12)
187
25
22
140
187
187
758
189
78
491
113
108
(4)
15
(6)
(55)
60
(115)
816
220
78
518
816
802
3
11
180
1
148
31
99
99
1
1
280
16
248
16
280
264
17
(1)
Centre
169
16
149
4
–
11
11
180
1
148
31
180
165
16
(1)
NEDBANK GROUP – ANNUAL RESULTS 2019
107
3 NON-INTEREST REVENUE
NON-INTEREST REVENUE
Non-interest revenue
(Rm)
(Rm)
NON-INTEREST REVENUE TO TOTAL
Non-interest revenue to total
OPERATING EXPENSES
operating expenses
(%)
(%)
8
4
7
1
2
3
0
5
3
2
3
6
0
4
2
6
7
9
5
2
7
9
9
5
2
,
3
3
8
,
9
2
8
,
7
0
8
1
,
2
8
,
8
0
8
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Rm
Commission and fees income
Administration fees
Card income
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Fair-value adjustments
Hedge-accounted portfolios
Fair-value adjustments – own long-term debt
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Private-equity income
Realised gains, dividends, interest and other income
Unrealised losses1
Investment income
Sundry income2
Total non-interest revenue
2019
18 739
1 252
3 743
1 136
652
267
516
4 391
2 239
4 543
1 837
60
(49)
109
–
4 524
99
2 708
426
1 291
262
723
(461)
198
377
2018
18 279
1 201
3 656
1 056
554
275
544
3 986
2 664
4 343
1 859
(2)
(30)
28
–
4 429
42
2 482
445
1 460
697
854
(157)
29
685
25 997
25 976
2019
3 256
53
222
198
185
1 508
1 034
56
(13)
(23)
10
4 390
99
2 708
426
1 157
267
727
(460)
174
101
8 175
2018
3 289
26
235
175
197
1 198
1 403
55
(8)
(20)
12
4 278
42
2 482
445
1 309
699
854
(155)
21
242
8 521
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.
2 Sundry income mainly comprises security dealings, rental income, fair value movements on non-trading investments and forex gains and losses.
2019
12 622
522
3 652
880
259
44
309
2 715
96
4 145
460
41
41
73
73
–
2018
12 002
509
3 583
788
249
41
284
2 515
89
3 944
442
15
15
84
84
–
13
109
13 318
(3)
51
12 591
2019
2 045
588
3
88
200
(65)
1 188
43
1 352
–
2018
2 063
567
2
71
1
223
(27)
1 188
38
1 400
–
–
–
(1)
(1)
4
(2)
(2)
3
36
3 436
20
3 484
2019
872
70
90
31
102
38
7
213
22
299
70
4
4
61
61
–
1
212
1 220
2018
928
82
72
31
57
36
37
282
25
306
54
(1)
(1)
67
67
–
2
156
1 206
2019
(56)
19
1
5
20
(101)
(45)
28
(30)
58
–
(4)
(4)
6
(81)
(152)
2018
(3)
17
1
2
18
(41)
(37)
(8)
(9)
1
–
–
6
216
174
108
NEDBANK GROUP – ANNUAL RESULTS 2019
INCOME STATEMENT
ANALYSIS
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
Rm
Commission and fees income
Administration fees
Card income
Cash-handling fees
Exchange commission
Guarantees income
Insurance commission
Other commission
Other fees
Service charges
Insurance income
Fair-value adjustments
Trading income
Commodities
Debt securities
Equities
Foreign exchange
Private-equity income
Unrealised losses1
Investment income
Sundry income2
Fair-value adjustments
Hedge-accounted portfolios
Fair-value adjustments – own long-term debt
Realised gains, dividends, interest and other income
2019
18 739
1 252
3 743
1 136
652
267
516
4 391
2 239
4 543
1 837
60
(49)
109
–
4 524
99
2 708
426
1 291
262
723
(461)
198
377
2018
18 279
1 201
3 656
1 056
554
275
544
3 986
2 664
4 343
1 859
(2)
(30)
28
–
4 429
42
2 482
445
1 460
697
854
(157)
29
685
2019
3 256
53
222
198
185
1 508
1 034
56
(13)
(23)
10
4 390
99
2 708
426
1 157
267
727
(460)
174
101
8 175
2018
3 289
26
235
175
197
1 198
1 403
55
(8)
(20)
12
4 278
42
2 482
445
1 309
699
854
(155)
21
242
8 521
Total non-interest revenue
25 997
25 976
1 Unrealised losses relate to equity investments in associates and joint ventures, which are estimated and converted to realised or dividends once earned.
2 Sundry income mainly comprises security dealings, rental income, fair value movements on non-trading investments and forex gains and losses.
2019
12 622
522
3 652
880
259
44
309
2 715
96
4 145
460
41
41
73
73
–
2018
12 002
509
3 583
788
249
41
284
2 515
89
3 944
442
15
15
84
84
–
13
109
13 318
(3)
51
12 591
2019
2 045
588
3
88
200
(65)
1 188
43
1 352
–
2018
2 063
567
2
71
1
223
(27)
1 188
38
1 400
–
–
–
(1)
(1)
4
(2)
(2)
3
36
3 436
20
3 484
2019
872
70
90
31
102
38
7
213
22
299
70
4
4
61
61
–
1
212
1 220
2018
928
82
72
31
57
36
37
282
25
306
54
(1)
(1)
67
67
–
2
156
1 206
2019
(56)
19
1
5
20
(101)
(45)
28
(30)
58
–
(4)
(4)
6
(81)
(152)
2018
(3)
17
1
2
18
(41)
(37)
(8)
(9)
1
–
–
6
216
174
Favourable
Unfavourable
• Deeper share of wallet with clients.
• Subdued client transactional activity.
• Mainbanked client gains in middle, private, small-business and
• Reduced off high 2018 base transactions.
corporate segments.
• Growth in commission and fees income in RBB of 5,2%.
• High weather-related insurance claims in H1 2019.
• Worsening economic environment led to negative revalauations
in private-equity income.
•
Impact of Banco Único option to increase our shareholding.
NEDBANK GROUP – ANNUAL RESULTS 2019
109
4 EXPENSES
Total operating expenses
TOTAL OPERATING EXPENSES
(Rm)
(Rm)
COST-TO-INCOME RATIO
(%)
Efficiency ratio
(%)
0
1
1
6
2
6
6
3
8
2
2
1
8
9
2
2
3
6
1
3
9
7
1
2
3
1
,
6
5
,
9
6
5
,
6
8
5
,
2
7
5
,
5
6
5
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of computer equipment
Depreciation of right-of-use assets: computer equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances1
Occupation and accommodation2,3
Marketing and public relations
Communication and travel
Other operating expenses4
Activity-justified transfer pricing
Total operating expenses
Analysis of total information technology-related function
spend included in total expenses
IT staff-related costs within group technology
Depreciation and amortisation of computer equipment,
software and intangibles
Other IT costs (including licensing, development,
maintenance and processing charges)5
Total IT-related functional spend
Nedbank Group
2019
17 322
15 089
2 550
1 980
570
(317)
4 878
746
79
1 167
217
2 669
4 152
2 274
1 455
845
1 253
–
32 179
2019
2 110
1 993
2 923
7 026
2018
17 450
14 240
3 358
2 625
733
(148)
4 341
753
958
336
2 294
3 989
2 416
1 532
841
1 063
–
31 632
2018
2 027
1 818
2 668
6 513
Corporate and
Investment Banking
2019
2 783
2018
3 003
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2019
7 940
2018
8 036
2019
1 608
2018
1 562
2019
1 068
2018
1 097
2019
3 923
2018
3 752
503
398
1 771
870
321
220
83
48
2 200
2 805
667
231
89
304
55
1 972
6 604
1 208
226
93
297
214
1 133
6 572
2 509
1 954
677
327
555
4 651
1 738
1 947
724
329
357
6 031
20 384
20 032
210
149
89
52
69
615
3 113
174
145
96
61
72
682
3 012
437
180
60
68
188
343
2 427
296
213
67
60
152
483
2 416
329
(240)
540
94
386
(7 581)
(349)
573
(115)
552
94
268
(8 329)
(400)
1 During the year the group's Cash Operating Division was transferred from CIB to RBB and the concurrent review of the activity-justified transfer pricing led
to some costs shifting to CIB, reflected in the fees and insurance and activity-justified transfer pricing lines. This had no impact on the group's expenses or
expense growth.
2 Includes depreciation of right-of-use asset of R813m.
3 Includes building depreciation charges of R451m (December 2018: R423m).
4 Includes furniture depreciation charges of R358m (December 2018: R328m), consumables and sundry expenses.
5 Includes consulting and professional fees, included in fees and insurances, communication and travel, and other IT-related spend, included in computer
processing.
110
NEDBANK GROUP – ANNUAL RESULTS 2019
INCOME STATEMENT
ANALYSIS
GROSS OPERATING INCOME GROWTH RATE
LESS EXPENSES GROWTH RATE (JAWS RATIO)
(%)
TOTAL EMPLOYEES
(Permanent staff)
Total employees
(permanent staff)
2,7
1,3
0,6
(1,5)
Dec
2015
Dec
2016
(3,0)
Dec
2017
Dec
2018
Dec
2019
2
1
3
1
3
1
0
4
2
3
1
3
5
1
3
7
8
8
0
3
3
1
2
9
2
2015
2016
2017
2018
2019
Rm
Staff costs
Salaries and wages
Total incentives
Short-term incentives
Long-term incentives
Other staff costs
Computer processing
Depreciation of computer equipment
Depreciation of right-of-use assets: computer equipment
Amortisation of intangible assets
Operating lease charges for computer processing
Other computer processing expenses
Fees and insurances1
Occupation and accommodation2,3
Marketing and public relations
Communication and travel
Other operating expenses4
Activity-justified transfer pricing
Total operating expenses
Analysis of total information technology-related function
spend included in total expenses
IT staff-related costs within group technology
Depreciation and amortisation of computer equipment,
software and intangibles
Other IT costs (including licensing, development,
maintenance and processing charges)5
Total IT-related functional spend
2019
17 322
15 089
2 550
1 980
570
(317)
4 878
746
79
1 167
217
2 669
4 152
2 274
1 455
845
1 253
–
32 179
2019
2 110
1 993
2 923
7 026
2018
17 450
14 240
3 358
2 625
733
(148)
4 341
753
958
336
2 294
3 989
2 416
1 532
841
1 063
–
31 632
2018
2 027
1 818
2 668
6 513
1 During the year the group's Cash Operating Division was transferred from CIB to RBB and the concurrent review of the activity-justified transfer pricing led
to some costs shifting to CIB, reflected in the fees and insurance and activity-justified transfer pricing lines. This had no impact on the group's expenses or
expense growth.
2 Includes depreciation of right-of-use asset of R813m.
3 Includes building depreciation charges of R451m (December 2018: R423m).
4 Includes furniture depreciation charges of R358m (December 2018: R328m), consumables and sundry expenses.
5 Includes consulting and professional fees, included in fees and insurances, communication and travel, and other IT-related spend, included in computer
processing.
Nedbank Group
Corporate and
Investment Banking
2019
2 783
2018
3 003
Retail and
Business Banking
Wealth
Nedbank Africa Regions
Centre
2019
7 940
2018
8 036
2019
1 608
2018
1 562
2019
1 068
2018
1 097
2019
3 923
2018
3 752
503
398
1 771
870
321
220
83
48
2 200
2 805
667
231
89
304
55
1 972
6 604
1 208
226
93
297
214
1 133
6 572
2 509
1 954
677
327
555
4 651
1 738
1 947
724
329
357
6 031
20 384
20 032
210
149
89
52
69
615
3 113
174
145
96
61
72
682
437
180
60
68
188
343
3 012
2 427
296
213
67
60
152
483
2 416
329
(240)
540
94
386
(7 581)
(349)
573
(115)
552
94
268
(8 329)
(400)
Favourable
• Headcount reduction of 1 874.
• STI and LTI decreases given the group's financial performance.
• Final PRMA credit of R354m.
• Optimisation initiatives delivering cost savings, including
cumulative run-rate savings from our target operating model of
R1 147m.
Unfavourable
•
Increase in computer processing costs relating to software
amortisation as we invest in technology and digital channels.
• Higher fees related to digital innovations.
• The R134m cost of creating more than 3 300 job opportunities
through YES.
NEDBANK GROUP – ANNUAL RESULTS 2019
111
5 NON-TRADING AND CAPITAL ITEMS
Rm
Profit attributable to ordinary equity holders
Non-trading and capital items
IAS 16 – loss on disposal of property and equipment
IAS 36 – goodwill impairment
IAS 36 – impairment of property and equipment
IFRS 5 – impairment of non-current assets held for sale
IFRS 16 – impairment of right-of-use assets
IAS 36 – impairment of intangible assets
IAS 40 – profit on revaluation of investment properties
2019
2018
Gross
651
18
117
148
48
33
289
(2)
Net of
taxation
12 001
505
13
117
107
48
24
198
(2)
Gross
164
29
Net of
taxation
13 376
119
22
135
97
Headline earnings
12 506
13 495
6 TAXATION CHARGE
Direct taxation
Taxation rate reconciliation (excluding non-trading and capital items) (%)
Standard rate of SA normal taxation
Reduction of taxation rate:
– Non-taxable income
– Capital items
– Foreign income and section 9D attribution
– Share of profits of associate companies
– Additional tier 1 taxation on interest paid1
– Non-deductible expenses
– Zimbabwe hyperinflation
– Prior-year overprovision
Total taxation on income as percentage of profit before taxation
Effective tax rate excluding ETI associate income/(loss)
2019
3 942
2018
4 807
28,0
(1,8)
(0,2)
(1,0)
(1,3)
(0,8)
0,8
0,3
(1,2)
22,8
24,0
28,0
(1,4)
(0,1)
(0,6)
(0,9)
0,7
(0,5)
25,2
26,1
1 With effect from 1 January 2019 the accounting treatment of additional tier 1 capital instruments changed in terms of IFRS. The taxation relief on interest paid
on additional tier 1 capital instruments is now accounted for in comprehensive income (previously in equity). However, the underlying interest paid on additional
tier 1 capital instruments is still accounted for in equity. Comparative information has not been restated as the amounts are not material.
7 PREFERENCE SHARES
Dividends declared
Number of
shares
Cents per
share
Amount
Rm
2020
Nedbank – Final (dividend number 34) declared for 2019 – payable April 2020
358 277 491
42,11186
150,9
2019
Nedbank – Final (dividend no 32) declared for 2018 – paid March 2019
Nedbank – Interim (dividend no 33) declared for 2019 – paid September 2019
358 277 491
358 277 491
42,23172
42,35729
Total of dividends declared
Nedbank (MFC) – Participating preference shares1
Less: Dividends declared in respect of shares held by group entities
2018
Nedbank – Final (dividend no 30 ) declared for 2017 – paid March 2018
Nedbank – Interim (dividend no 31) declared for 2018 – paid August 2018
Total of dividends declared
Nedbank (MFC) – Participating preference shares1
Less: Dividends declared in respect of shares held by group entities
1 Share in economic profit calculated biannually.
358 277 491
358 277 491
43,17350
41,82076
151,3
151,8
303,1
41,7
(31,6)
313,2
154,7
149,8
304,5
50,0
(31,7)
322,8
112
NEDBANK GROUP – ANNUAL RESULTS 2019
8 HYPERINFLATION
Headline earnings
R'm
Core earnings
Impairment of legacy debt1
Hyperinflation of income statement items
Hyperinflation adjustment – net monetary loss
Rebase of Dec 2018 equity and gains from indexing
non-monetary assets2
Hyperinflation of income statement items
Headline earnings
1
Included in Sundry income within NIR.
INCOME STATEMENT
ANALYSIS
Non-
controlling
interest
2019
Nedbank
Group
2019
Zimbabwe
2019
135
(67)
80
(296)
(216)
(80)
(148)
78
(44)
53
(195)
(142)
(53)
(108)
(101)
(74)
(27)
Nedbank
Group
2018
142
142
2 Rebase of December 2018 equity, R246m, and gains from indexing non monetary assets, R30m.
ZIMBABWE TIMELINE
1 OCT 2018
Monetary policy statement,
presented by the Governor
of the Reserve Bank of
Zimbabwe, introduces
RTGS as a means
of exchange
22 FEB 2019
Zimbabwe gazetted two
legal instruments1; resulting in
recognition of RTGS$ as legal
tender and the initial exchange
rate (set by government) was
RTGS$ 2,5 to 1 US$
11 OCT 2019
The Zimbabwe Public
Accountants and Auditors
Board’s announced
that Zimbabwe is in
hyperinflation effective
from 1 July 2019
31 DEC 2018
NAV: R170m
RTGS$ 3,88 : 1 US$
RTGS$ 0,27 : 1 ZAR
31 DEC 2019
NAV: R123m
ZIM$ 16,77 : 1 US$
ZIM$ 1,20 : 1 ZAR
EFFECTS OF CHANGE IN EXCHANGE RATES
At 31 December 2018 a FCTR loss of R755m (R499m after non-controlling interests) was recognised by Nedbank Group for the
application of an implied Old Mutual rate (RTGS$3,88: US$1) on the net assets of Nedbank Zimbabwe. At a statutory level Nedbank
Zimbabwe was required by law to report its NAV using the official exchange rate RTGS$1:1US$. During the period, due to the effects
of weakening of the RTGS$ and ultimately the Zimbabwe dollar (ZIM$ 16,77: US$ 1), there was an impairment of legacy assets
(amounts due in foreign currency prior to 22 Feb 2019) of R89m (R67m post tax) due to uncertainty regarding the recovery thereof.
Key drivers of hyperinflation
IAS 29 requires transactions and balances to be stated in terms of the measuring unit current at the end of the reporting period,
using a general price index, to account for the effect of loss of purchasing power during the period. The group elected to use
the Zimbabwe CPI index, provided by the Reserve Bank of Zimbabwe, as the general price index as this provides an observable
published indicator of changes in the general purchasing power of the country.
At the beginning of the period of applying IAS 29, the components of equity are restated by applying a general price escalation
factor from 1 January 2019 to 31 December 2019. The Zimbabwe CPI index increased 6,21 times during this period which resulted
in a monetary loss of R246m by debiting current-year earnings against a credit in equity. Hyperinflation accounting will result in
an equity rebase every period. The rebase is impacted by changes in the Zimbabwe CPI index, changes in the Zimbabwean dollar
foreign exchange rate and underlying balance sheet growth.
All items recognised in the statement of comprehensive income are adjusted by applying the change in the general price index from
the dates when the items of income and expenses were initially earned or incurred to the end of the reporting period. This resulted
in an increase in certain lines of the income statement, totalling R80m, and an equal but opposite loss included in the net monetary
loss. The net headline earnings of the income statement indexing is nil.
The carrying amounts of non-monetary assets (ie fixed assets, debtor prepayments, etc) accounted at historical cost have been
adjusted to reflect the change in the general price index from 1 January 2019 to 31 December 2019. This resulted in an increase in
assets of R30m and the recognition of a monetary gain of R30m.
NEDBANK GROUP – ANNUAL RESULTS 2019
113
114
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
STATEMENT OF FINANCIAL
POSITION ANALYSIS
116
Loans and advances
122
Investment securities
123
Investments in associate companies
124
Intangible assets
126 Amounts owed to depositors
129 Liquidity risk and funding
132 Equity analysis
133 Capital management
136 Economic capital adequacy
137 External credit ratings
NEDBANK GROUP – ANNUAL RESULTS 2019
115
9 LOANS AND ADVANCES
SEGMENTAL BREAKDOWN
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Macro fair-value hedge-accounted portfolios
Other loans and advances
Loans and advances before impairments
Impairment of advances
Total banking loans and advances
Comprises:
– Loans and advances to clients
– Loans and advances to banks
Total loans and advances after impairments
Trading loans and advances
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Africa Regions
Centre1
2019
162 238
179 801
150
17 089
26 747
24 829
199 040
14 945
6 508
130 067
12 766
6 563
941
5
781 689
(17 534)
764 155
741 906
22 249
764 155
32 678
2018
156 414
166 221
152
16 608
22 587
22 219
181 907
14 616
5 241
121 003
15 312
5 815
48
13
728 156
(15 488)
712 668
697 846
14 822
712 668
23 637
2019
10
145 602
2018
11
134 984
2
5 557
3 594
180 446
13 078
5 166
2 795
12 440
163 340
12 644
4 790
2 170
15 077
34
(7)
365 128
(2 217)
362 911
344 366
18 545
362 911
32 678
336 605
(1 603)
335 002
323 734
11 268
335 002
23 637
4 738
4 892
(259)
(292)
2019
138 811
23 668
44
16 958
17 871
22 663
10 028
1 270
170
125 285
140
6 563
363 471
(14 075)
349 396
349 394
2
349 396
2018
133 163
20 765
68
16 501
14 809
20 005
10 680
1 220
163
116 229
76
5 815
339 494
(12 731)
326 763
326 770
(7)
326 763
2019
16 988
8 814
11
171
2018
17 068
8 915
22
174
62
186
68
159
30 970
(229)
30 741
28 393
2 348
30 741
31 298
(187)
31 111
27 909
3 202
31 111
2019
6 941
1 721
95
131
3 148
2 166
4 087
597
1 172
2 364
5
22 427
(749)
21 678
20 324
1 354
21 678
2018
6 672
1 523
60
107
4 010
2 214
3 287
752
288
2 914
12
21 839
(802)
21 037
20 689
348
21 037
2019
(512)
(4)
2018
(500)
34
(439)
(378)
907
(307)
(264)
(571)
(571)
(571)
55
1
(1 080)
(165)
(1 245)
(1 256)
11
(1 245)
1 Centre includes the group's centrally managed macro fair-value hedge-accounting adjustment, intercluster adjustments relating to deferred revenue recognised in
Market share as per BA900
loans and advances, a central impairment provision and an impairment on other assets.
Home loans (2016–2019)
Market share as per BA900
(%)
HOME LOANS (2016–2019)
(%)
COMMERCIAL MORTGAGE LOANS (2016–2019)
(%)
Commercial mortgage loans (2016–2019)
(%)
,
4
4
1
0
,
1
2
,
9
3
3
1
,
3
2
6
7
,
,
7
8
3
0
7
,
,
9
6
1
,
2
5
1
,
2
2
2
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
116
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
SEGMENTAL BREAKDOWN
Rm
Home loans
Commercial mortgages
Properties in possession
Credit cards
Overdrafts
Personal loans
Term and other loans
Overnight loans
Foreign client lending
Instalment debtors
Preference shares and debentures
Factoring accounts
Macro fair-value hedge-accounted portfolios
Other loans and advances
Loans and advances before impairments
Impairment of advances
Total banking loans and advances
Comprises:
– Loans and advances to clients
– Loans and advances to banks
Total loans and advances after impairments
Trading loans and advances
Nedbank Group
Corporate and
Investment Banking
Retail and
Business Banking
Wealth
Africa Regions
Centre1
2019
162 238
179 801
150
17 089
26 747
24 829
199 040
14 945
6 508
130 067
12 766
6 563
941
5
781 689
(17 534)
764 155
741 906
22 249
764 155
32 678
2018
156 414
166 221
152
16 608
22 587
22 219
181 907
14 616
5 241
121 003
15 312
5 815
48
13
728 156
(15 488)
712 668
697 846
14 822
712 668
23 637
2019
10
145 602
180 446
13 078
5 166
2 795
12 440
365 128
(2 217)
362 911
344 366
18 545
362 911
32 678
5 557
3 594
34
(7)
2018
134 984
11
2
163 340
12 644
4 790
2 170
15 077
336 605
(1 603)
335 002
323 734
11 268
335 002
23 637
2019
138 811
23 668
44
16 958
17 871
22 663
10 028
1 270
170
125 285
140
6 563
363 471
(14 075)
349 396
349 394
2
349 396
2018
133 163
20 765
68
16 501
14 809
20 005
10 680
1 220
163
116 229
76
5 815
339 494
(12 731)
326 763
326 770
(7)
326 763
2019
16 988
8 814
11
171
4 738
62
186
30 970
(229)
30 741
28 393
2 348
30 741
2018
17 068
8 915
22
174
4 892
68
159
31 298
(187)
31 111
27 909
3 202
31 111
2019
6 941
1 721
95
131
3 148
2 166
4 087
597
1 172
2 364
5
22 427
(749)
21 678
20 324
1 354
21 678
2018
6 672
1 523
60
107
4 010
2 214
3 287
752
288
2 914
12
21 839
(802)
21 037
20 689
348
21 037
2019
(512)
(4)
2018
(500)
34
(259)
(292)
(439)
(378)
907
(307)
(264)
(571)
(571)
(571)
55
1
(1 080)
(165)
(1 245)
(1 256)
11
(1 245)
1 Centre includes the group's centrally managed macro fair-value hedge-accounting adjustment, intercluster adjustments relating to deferred revenue recognised in
loans and advances, a central impairment provision and an impairment on other assets.
Credit cards (2016–2019)
(%)
CREDIT CARDS (2016–2019)
(%)
Personal loans (2016–2019)
(%)
PERSONAL LOANS (2016–2019)
(%)
,
0
3
1
,
4
7
2
1
,
5
2
1
,
5
2
4
9
,
,
2
0
1
,
6
3
2
,
3
6
1
1
,
1
1
,
8
8
3
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
CORE CORPORATE LOANS (2016–2019)
(%)
Core corporate loans (2016–2019)
(%)
INSTALMENT SALES AND LEASES (2016–2019)
(%)
Instalment credit (2016–2019)
(%)
2
,
1
2
5
,
1
2
1
,
9
1
1
,
1
2
1
,
7
1
,
7
8
2
,
6
7
2
,
7
8
1
,
3
0
2
,
7
4
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
NEDBANK GROUP – ANNUAL RESULTS 2019
117
SUMMARY OF LOANS AND ADVANCES AND COVERAGE RATIOS
GLAA, ECL and Coverage ratios, by Cluster, by Stage
Stage 1
Stage 2
Stage 3
TOTAL
Coverage
Coverage
On-B/S GLAA
Stage 3
(including
GLAA as % of
FVOCI)
total GLAA
Coverage
%
2,25
2,79
1,83
6,97
2,97
7,69
5,53
5,29
5,31
Coverage
Coverage
TOTAL
On-B/S GLAA
Stage 3
(including
GLAA as % of
FVOCI)
total GLAA
Coverage
%
1,52
2,5
1,08
6,89
3,00
7,56
4,06
6,83
4,97
38,0
759 684
2,31
775 557
3,62
GLAA
Rm
4 074
2 914
1 160
21 161
3 396
17 765
929
1 422
3
27 589
448
28 037
GLAA
Rm
5 702
3 555
2 147
17 304
2 575
14 729
812
1 413
25 231
25 231
86
10 792
Stage 3
ECL
Rm
1 003
788
215
8 813
925
7 888
180
459
16
10 471
235
ECL
Rm
663
386
277
7 954
713
7 241
140
521
16
9 294
75
9 369
%
24,6
27,0
18,5
41,6
27,2
44,4
19,4
32,3
%
11,6
10,9
12,9
45,9
27,7
49,2
17,2
36,9
36,8
GLAA
Rm
343 123
199 652
143 471
363 471
78 988
284 483
30 970
22 427
(307)
15 873
37 897
907
6
814 367
GLAA
Rm
318 061
177 239
140 822
339 494
75 401
264 093
31 298
21 839
(1 080)
709 612
18 426
23 755
ECL
Rm
2 217
1 519
698
14 075
1 335
12 740
229
749
264
17 534
340
34
271
18 179
ECL
Rm
1 603
950
653
12 731
1 114
11 617
187
802
165
122
25
210
%
0,65
0,76
0,49
3,87
1,69
4,48
0,74
3,34
%
0,50
0,54
0,46
3,75
1,48
4,40
0,60
3,67
Rm
358 996
215 525
143 471
363 471
78 988
284 483
30 783
22 427
(308)
Rm
336 487
177 239
159 248
339 494
75 401
264 093
31 298
21 839
(1 080)
%
1,26
1,56
0,81
5,82
4,30
6,24
3,02
6,34
%
1,69
2,01
1,35
5,10
3,42
5,58
2,59
6,47
3,47
15 488
2,18
728 038
751 793
15 845
December 2019
Corporate and Investment Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Africa Regions
Centre
Gross loans and advances/ECL held at amortised
cost
GLAA/ECL for assets held at FVOCI
GLAA held at FVTPL1
GLAA for fair-value hedge-accounted portfolios
other balances
ECL held for non-LAA
Off-balance-sheet ECL
GLAA
Rm
309 039
183 602
125 437
302 019
69 457
232 562
29 589
19 700
(310)
660 037
14 848
37 897
907
6
ECL
Rm
539
365
174
2 455
228
2 227
24
221
–
3 239
67
34
115
Coverage
%
0,17
0,20
0,14
0,81
0,33
0,96
0,08
1,12
GLAA
Rm
30 010
13 136
16 874
40 291
6 135
34 156
452
1 305
0,49
72 058
577
Total GLAA/ ECL2
713 695
3 455
72 635
December 2018
Corporate and Investment Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Africa Regions
Centre
Gross loans and advances/ECL held at amortised
cost
GLAA/ECL for held at FVOCI
GLAA/ECL for held at FVTPL1
ECL held for non-LAA
Off-balance-sheet ECL
Total GLAA/ECL
GLAA
Rm
285 122
165 232
119 890
281 960
66 887
215 073
29 944
19 314
(1 080)
615 260
14 913
23 755
Stage 1
ECL
Rm
526
353
173
2 005
223
1 782
25
205
1
Coverage
%
0,18
0,21
0,14
0,71
0,33
0,83
0,08
1,06
2 762
0,45
24
25
78
GLAA
Rm
27 237
8 452
18 785
40 230
5 939
34 291
542
1 112
69 121
3 513
653 928
2 889
72 634
1
Includes GLAA for fair-value hedge-accounted portfolios of R55m.
2 Total GLAA includes trading loans and advances of R32 678m (2018: R23 637m).
ECL
Rm
675
366
309
2 807
182
2 625
25
69
248
3 824
38
70
3 932
Stage 2
ECL
Rm
414
211
203
2 772
178
2 594
22
76
148
3 432
98
57
3 587
118
NEDBANK GROUP – ANNUAL RESULTS 2019
Stage 1
Stage 2
Stage 3
TOTAL
December 2019
Corporate and Investment Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Africa Regions
Centre
cost
other balances
ECL held for non-LAA
Off-balance-sheet ECL
Total GLAA/ ECL2
Gross loans and advances/ECL held at amortised
GLAA/ECL for assets held at FVOCI
GLAA held at FVTPL1
GLAA for fair-value hedge-accounted portfolios
December 2018
Corporate and Investment Banking (CIB)
CIB excluding Property Finance
Property Finance
Retail and Business Banking (RBB)
Business Banking
Retail
Wealth
Africa Regions
Centre
cost
GLAA/ECL for held at FVOCI
GLAA/ECL for held at FVTPL1
ECL held for non-LAA
Off-balance-sheet ECL
Total GLAA/ECL
Coverage
Coverage
GLAA
Rm
309 039
183 602
125 437
302 019
69 457
232 562
29 589
19 700
(310)
660 037
14 848
37 897
907
6
GLAA
Rm
285 122
165 232
119 890
281 960
66 887
215 073
29 944
19 314
(1 080)
615 260
14 913
23 755
ECL
Rm
539
365
174
2 455
228
2 227
24
221
–
3 239
67
34
115
ECL
Rm
526
353
173
2 005
223
1 782
25
205
1
24
25
78
%
0,17
0,20
0,14
0,81
0,33
0,96
0,08
1,12
GLAA
Rm
30 010
13 136
16 874
40 291
6 135
34 156
452
1 305
0,49
72 058
577
%
0,18
0,21
0,14
0,71
0,33
0,83
0,08
1,06
GLAA
Rm
27 237
8 452
18 785
40 230
5 939
34 291
542
1 112
69 121
3 513
ECL
Rm
675
366
309
2 807
182
2 625
25
69
248
3 824
38
ECL
Rm
414
211
203
2 772
178
2 594
22
76
148
3 432
98
57
3 587
713 695
3 455
72 635
Stage 1
70
3 932
Stage 2
Coverage
Coverage
%
2,25
2,79
1,83
6,97
2,97
7,69
5,53
5,29
5,31
%
1,52
2,5
1,08
6,89
3,00
7,56
4,06
6,83
4,97
Gross loans and advances/ECL held at amortised
2 762
0,45
1
Includes GLAA for fair-value hedge-accounted portfolios of R55m.
2 Total GLAA includes trading loans and advances of R32 678m (2018: R23 637m).
653 928
2 889
72 634
GLAA
Rm
4 074
2 914
1 160
21 161
3 396
17 765
929
1 422
3
27 589
448
28 037
GLAA
Rm
5 702
3 555
2 147
17 304
2 575
14 729
812
1 413
25 231
25 231
ECL
Rm
1 003
788
215
8 813
925
7 888
180
459
16
10 471
235
86
10 792
Stage 3
ECL
Rm
663
386
277
7 954
713
7 241
140
521
16
9 294
75
9 369
Coverage
%
24,6
27,0
18,5
41,6
27,2
44,4
19,4
32,3
GLAA
Rm
343 123
199 652
143 471
363 471
78 988
284 483
30 970
22 427
(307)
38,0
759 684
15 873
37 897
907
6
814 367
GLAA
Rm
318 061
177 239
140 822
339 494
75 401
264 093
31 298
21 839
(1 080)
709 612
18 426
23 755
Coverage
%
11,6
10,9
12,9
45,9
27,7
49,2
17,2
36,9
36,8
ECL
Rm
2 217
1 519
698
14 075
1 335
12 740
229
749
264
17 534
340
34
271
18 179
TOTAL
ECL
Rm
1 603
950
653
12 731
1 114
11 617
187
802
165
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
On-B/S GLAA
(including
FVOCI)
Stage 3
GLAA as % of
total GLAA
Coverage
%
0,65
0,76
0,49
3,87
1,69
4,48
0,74
3,34
Rm
358 996
215 525
143 471
363 471
78 988
284 483
30 783
22 427
(308)
%
1,26
1,56
0,81
5,82
4,30
6,24
3,02
6,34
2,31
775 557
3,62
On-B/S GLAA
(including
FVOCI)
Stage 3
GLAA as % of
total GLAA
Coverage
%
0,50
0,54
0,46
3,75
1,48
4,40
0,60
3,67
Rm
336 487
177 239
159 248
339 494
75 401
264 093
31 298
21 839
(1 080)
%
1,69
2,01
1,35
5,10
3,42
5,58
2,59
6,47
3,47
15 488
2,18
728 038
122
25
210
751 793
15 845
NEDBANK GROUP – ANNUAL RESULTS 2019
119
NEDBANK GROUP COVERAGE
(%)
Nedbank Group coverage ratio
(Rm)
STAGE 3 ADVANCES AS A PERCENTAGE OF
GROSS BANKING LOANS AND ADVANCES
(Rm)
4,25
2,53
1,14
4,76
2,72
1,12
4,82
2,71
0,82
5,10
3,47
1,69
5,82
3,62
1,26
6
6
,
1
4
0
3
3
8
1
,
2
1
3
2
,
2017
2018
2019
17 559
2015
19 553
19 576
22 785
2016
2017
25 231
2018
28 037
2019
RBB
Total Nedbank Group
CIB
Stage 3 loans and advances
GLAA, ECL AND COVERAGE, BY PRODUCT
Stage 1
Stage 2
Stage 3
TOTAL
December 2019
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Personal, term and other loans
Other1
GLAA/ECL held at amortised cost
December 2018
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Personal, term and other loans
Other1
GLAA/ECL held at amortised cost
1
Includes credit and zero balances.
GLAA
Rm
140 062
152 930
105 416
29 216
210 385
22 028
660 037
GLAA
Rm
133 726
138 998
84 686
25 380
192 370
40 100
615 260
ECL
Rm
287
219
802
860
1 103
(32)
3 239
Coverage
%
0,21
0,14
0,76
2,95
0,52
0,49
GLAA
Rm
14 181
18 701
18 043
5 209
12 733
3 191
72 058
ECL
Rm
538
336
1 321
524
1 023
82
3 824
Coverage
%
3,79
1,80
7,32
10,06
8,03
5,31
Stage 1
Stage 2
Stage 3
TOTAL
ECL
Rm
236
300
631
619
909
67
2 762
Coverage
%
0,18
0,22
0,75
2,44
0,47
0,45
GLAA
Rm
15 574
19 856
12 924
4 874
14 728
1 165
69 121
ECL
Rm
616
238
1 013
686
866
13
3 432
Coverage
%
3,96
1,20
7,84
14,07
5,88
4,97
Coverage
Coverage
FVOCI)
total GLAA
On-B/S LAA
Stage 3
(including
GLAA as % of
GLAA
Rm
7 826
2 488
6 607
3 081
7 520
67
27 589
GLAA
Rm
6 965
2 957
4 967
3 027
6 710
605
25 231
ECL
Rm
1 573
505
2 704
1 912
3 941
(164)
10 471
ECL
Rm
1 430
435
2 532
2 048
2 758
91
9 294
%
20,1
20,3
40,9
62,0
52,5
38,0
%
20,5
14,7
51,0
67,7
41,1
36,8
GLAA
Rm
162 069
174 119
130 066
37 506
230 638
25 286
759 684
Rm
156 265
161 811
102 577
33 281
213 808
41 870
709 612
ECL
Rm
2 398
1 060
4 827
3 296
6 067
(114)
17 534
Rm
2 282
973
4 176
3 353
4 533
171
15 488
%
1,48
0,61
3,71
8,79
2,63
2,31
%
1,46
0,60
4,07
10,07
2,12
2,18
Rm
162 069
174 119
130 066
37 506
247 424
24 373
775 557
Rm
156 265
161 811
102 577
33 281
232 234
41 870
728 038
%
4,83
1,43
5,08
8,22
3,05
3,62
%
4,46
1,83
4,84
9,10
2,89
3,47
Coverage
GLAA
ECL
Coverage
On-B/S LAA
Stage 3
(including
GLAA as % of
FVOCI)
total GLAA
Favourable
Unfavourable
• The bank's credit portfolio remains resilient despite the continued
• The increase in stage 3 GLAA was particularly prominent in the
weak macroeconomic environment.
MFC and Unsecured Lending.
• Banking book GLAA increased by 6,65% to R775,6bn.
• CIB experienced growth across the energy and mining sectors.
• RBB experienced growth across all asset classes.
• The stage 1 and stage 2 coverage ratios increased for the
wholesale portfolios due to the recalibration of models.
• RBB stage 3 coverage decreased as a result of lower loss
expectations for stage 3 clients based on empirical data.
• CIB stage 3 GLAA increased for specific counters within the
cement, retail and telecommunications sectors.
120
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
STAGE 3 ADVANCES AND COVERAGE RATIO
(Rm)
STAGE 1 AND STAGE 2 COVERAGE
(%)
39,6
19 576
36,8
38,0
25 231
27 589
4,97
5,31
Jan
2018
Dec
2018
Dec
2019
0,45
2018
0,49
2019
Stage 3 coverage
Stage 3 loans and advances
Stage 1 coverage
Stage 2 coverage
GLAA, ECL AND COVERAGE, BY PRODUCT
Stage 1
Stage 2
Stage 3
TOTAL
December 2019
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Personal, term and other loans
Other1
GLAA/ECL held at amortised cost
December 2018
Residential mortgages
Commercial mortgages
Instalment debtors
Credit cards and overdrafts
Personal, term and other loans
Other1
GLAA/ECL held at amortised cost
1
Includes credit and zero balances.
Coverage
Coverage
GLAA
Rm
140 062
152 930
105 416
29 216
210 385
22 028
660 037
GLAA
Rm
133 726
138 998
84 686
25 380
192 370
40 100
615 260
ECL
Rm
287
219
802
860
1 103
(32)
3 239
ECL
Rm
236
300
631
619
909
67
2 762
%
0,21
0,14
0,76
2,95
0,52
0,49
%
0,18
0,22
0,75
2,44
0,47
0,45
GLAA
Rm
14 181
18 701
18 043
5 209
12 733
3 191
72 058
GLAA
Rm
15 574
19 856
12 924
4 874
14 728
1 165
69 121
ECL
Rm
538
336
1 321
524
1 023
82
3 824
ECL
Rm
616
238
1 013
686
866
13
3 432
Stage 1
Stage 2
Coverage
Coverage
%
3,79
1,80
7,32
10,06
8,03
5,31
%
3,96
1,20
7,84
14,07
5,88
4,97
Favourable
Unfavourable
• The bank's credit portfolio remains resilient despite the continued
• The increase in stage 3 GLAA was particularly prominent in the
weak macroeconomic environment.
MFC and Unsecured Lending.
• Banking book GLAA increased by 6,65% to R775,6bn.
• RBB stage 3 coverage decreased as a result of lower loss
• CIB experienced growth across the energy and mining sectors.
• RBB experienced growth across all asset classes.
• The stage 1 and stage 2 coverage ratios increased for the
wholesale portfolios due to the recalibration of models.
expectations for stage 3 clients based on empirical data.
• CIB stage 3 GLAA increased for specific counters within the
cement, retail and telecommunications sectors.
ECL
Rm
1 573
505
2 704
1 912
3 941
(164)
10 471
Coverage
%
20,1
20,3
40,9
62,0
52,5
38,0
GLAA
Rm
162 069
174 119
130 066
37 506
230 638
25 286
759 684
On-B/S LAA
(including
FVOCI)
Stage 3
GLAA as % of
total GLAA
Coverage
%
1,48
0,61
3,71
8,79
2,63
2,31
Rm
162 069
174 119
130 066
37 506
247 424
24 373
775 557
%
4,83
1,43
5,08
8,22
3,05
3,62
ECL
Rm
2 398
1 060
4 827
3 296
6 067
(114)
17 534
Stage 3
TOTAL
Coverage
GLAA
ECL
Coverage
On-B/S LAA
(including
FVOCI)
Stage 3
GLAA as % of
total GLAA
%
20,5
14,7
51,0
67,7
41,1
36,8
Rm
156 265
161 811
102 577
33 281
213 808
41 870
709 612
Rm
2 282
973
4 176
3 353
4 533
171
15 488
%
1,46
0,60
4,07
10,07
2,12
2,18
Rm
156 265
161 811
102 577
33 281
232 234
41 870
728 038
%
4,46
1,83
4,84
9,10
2,89
3,47
ECL
Rm
1 430
435
2 532
2 048
2 758
91
9 294
GLAA
Rm
7 826
2 488
6 607
3 081
7 520
67
27 589
GLAA
Rm
6 965
2 957
4 967
3 027
6 710
605
25 231
NEDBANK GROUP – ANNUAL RESULTS 2019
121
10 INVESTMENT SECURITIES
Rm
Private-equity investments
Private-equity associates – Property Partners
Private-equity associates – Investment Banking
Private-equity – Property Partners
Private-equity – Investment Banking
Listed investments
Unlisted investments
Taquanta asset managers portfolio
Strate Limited
Other
Total listed and unlisted investments
Listed policyholder investments at market value
Unlisted policyholder investments at directors' valuation
Net policyholder liabilities
Total policyholder investments
Total investment securities
EQUITY RISK IN THE BANKING BOOK
Total equity portfolio
Disclosed at fair value
Equity-accounted, including investment in ETI
Percentage of total assets
Percentage of group minimum economic-capital requirement
(Rm)
(Rm)
(Rm)
(%)
(%)
2019
7 315
1 885
898
1 559
2 973
896
2 758
468
143
2 147
10 969
13 253
4 750
(11)
17 992
28 961
2019
14 886
10 969
3 917
1,3
4,8
20181
5 543
1 361
1 070
1 551
1 561
25
3 060
463
143
2 454
8 628
10 048
3 742
(14)
13 776
22 404
2018
12 669
8 628
4 041
1,2
4,7
• Equity investments in the banking book are primarily undertaken by CIB as part of its private-equity business. Any additional
investments are undertaken as a result of operational or strategic requirements or as part of debt restructuring.
• The ETI strategic investment value has declined by R571m since 2018, resulting in an overall decrease in the portfolio that
is equity-accounted.
• The Nedbank board sets the overall risk appetite and strategy of the group for equity risk, and business develops portfolio
objectives and investment strategies for its investment activities. These address the types of investment, expected business
returns, desired holding periods, diversification parameters and other elements of sound investment management oversight.
• The ETI strategic investment is accounted for under the equity method of accounting and is therefore not carried at fair value.
122
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
11
INVESTMENTS IN ASSOCIATE COMPANIES
Name of company and nature
of business
Associates
Listed
ETI1
Unlisted
Private equity: Tracker Technology
Holdings Proprietary Limited
Private equity: Other investments
Other strategic investments
Total
Equity-accounted earnings
Rm
Carrying amount
Rm
Net exposure to/(from)
associates3
Rm
2019
20182
2019
20182
2019
20182
668
49
33
43
793
608
2 674
3 245
856
333
549
285
409
3 917
506
42
248
4 041
(80)
528
69
333
1 Ecobank Transnational Incorporated is a pan-African bank and its shares are listed on the stock exchanges of Nigeria, Ghana and Ivory Coast.
2 Equity-accounted earnings included a R25m profit in December 2019 and a R96m loss in December 2018 related to SBV Services Proprietary Limited.
3 Includes on-balance-sheet and off-balance-sheet exposure.
The percentage holding in ETI at December 2019 was 21,2% (December 2018: 21,2%). The net exposure movement is due to loan
repayment and the reduction of off-balance-sheet exposure.
ACCOUNTING RECOGNITION OF ETI
Rm
Opening carrying value – as previously reported
IFRS 9 transitional adjustment
Opening carrying value
Share of associate earnings/(losses)1,2
Share of other comprehensive (losses)/income1,2
Foreign currency translation3
Closing carrying value (pre-impairment provision)
Impairment provision
Closing carrying value
2019
4 245
4 245
668
(1 169)
(70)
3 674
(1 000)
2 674
2018
4 320
(780)
3 540
608
(332)
429
4 245
(1 000)
3 245
1 Applicable period: 1 October 2018–31 March 2019.
2 Applicable average exchange rate: 1 January 2019–30 December 2019.
3 Applicable period: 1 January 2019–30 December 2019, i.e the cumulative difference at each quarter of the earnings and other comprehensive income
converted at an average USD/ZAR rate compared with the related US dollar balances converted at the quarter-end spot rate.
Accounting for associate income, together with Nedbank's share of ETI's other comprehensive income and movements in Nedbank's
FCTR, resulted in the carrying value of the group's strategic investment in ETI decreasing by 17,6% from R3,2bn at 31 December
2018 to R2,7bn at 31 December 2019. ETI's share price, which is thinly traded, decreased by 53,4% during the year, which resulted
in the market value of the group's investment in ETI decreasing to R1,3bn (28 February 2020: R1,2bn). Due to the prolonged
decline of ETI's listed share price below its carrying value, Nedbank performed a VIU test and reviewed its impairment provision
at 31 December 2019. Since management's VIU analysis exceeds the current carrying value of our investment no adjustment
to the R1,0bn impairment provision was required. The VIU calculation includes inputs from external sources and is a key area
of judgement.
NEDBANK GROUP – ANNUAL RESULTS 2019
123
12 INTANGIBLE ASSETS
Rm
Computer software and capitalised development costs
Goodwill1
Client relationships, contractual rights and other2
2019
8 254
5 057
55
13 366
2018
7 251
5 173
184
12 608
1 The group's annual impairment test indicated that the goodwill relating to the Nedgroup Trust subsidiary within Nedbank Wealth was impaired, hence R117m
of goodwill has been written off. This impairment was recognised in non-trading and capital items (note 5).
2 Client relationships, contractual rights and other for 2019 includes a R58m impairment recognised in non-trading and capital items during the year.
COMPUTER SOFTWARE AND CAPITALISED DEVELOPMENT COSTS – CARRYING AMOUNT
Rm
Computer software1
Core product and client systems
Support systems
Digital systems
Payment systems
Amorti-
sation
periods
2–10 years
Development costs not yet commissioned
none
Core product and client systems
Support systems
Digital systems
Payment systems
Computer software
Opening balance
Additions
Commissioned during the period
Disposals and retirements
Foreign exchange and other moves
Amortisation charge for the period
Impairments
Closing balance
Development costs not yet commissioned
Opening balance
Additions
Commissioned during the period
Impairments
Closing balance
* 1 The categories of computer software for December 2018 have been revised.
* 2 929
6 502
1 689
2 435
1 721
657
1 752
447
326
869
110
8 254
5 310
378
2 082
(2)
(1 167)
(99)
6 502
1 941
2 025
(2 082)
(132)
1 752
2018
5 310
1 630
2 053
935
692
1 941
454
584
847
56
7 251
3 592
393
2 313
(17)
3
(958)
(16)
5 310
2 411
1 971
(2 313)
(128)
1 941
124
NEDBANK GROUP – ANNUAL RESULTS 2019
125
NOTESSTATEMENT OF FINANCIAL POSITION ANALYSISNEDBANK GROUP – ANNUAL RESULTS 2019 Retail and Business Banking
Wealth
Nedbank Africa Regions
Centre
2019
69 996
10 661
252 231
187 061
49 079
10 979
5 112
6 013
2018
67 200
10 141
240 128
172 663
52 385
10 497
4 583
5 051
2019
1 838
21 130
17 070
12 964
677
1 384
2 045
22
2018
1 777
21 354
16 354
11 662
669
1 939
2 084
10
338 901
322 520
40 060
39 495
339 359
(458)
338 901
321 244
1 276
322 520
40 054
6
40 060
39 486
9
39 495
2019
7 645
794
17 335
11 044
3 299
1 524
1 468
455
3 699
295
30 223
28 827
1 396
30 223
2018
7 846
947
16 275
11 075
1 424
1 136
2 640
322
3 648
434
29 472
28 341
1 131
29 472
2019
92
(161)
3
79
(243)
2018
59
(203)
3
(1)
71
(276)
115 285
326
86 271
(120)
115 542
86 007
113 497
2 045
115 542
83 561
2 446
86 007
13 AMOUNTS OWED TO DEPOSITORS
SEGMENTAL BREAKDOWN
Rm
Current accounts
Savings accounts
Other deposits and loan accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustments
Deposits received under repurchase agreements
Total amounts owed to depositors
Comprises:
– Amounts owed to clients
– Amounts owed to banks
Total amounts owed to depositors
Nedbank Group
Corporate and
Investment Banking
2019
86 199
32 586
614 909
325 730
66 735
75 748
146 696
25 734
118 984
326
25 644
904 382
846 625
57 757
904 382
2018
85 267
32 442
573 103
305 251
66 314
73 659
127 879
23 316
89 919
(120)
21 877
825 804
765 516
60 288
825 804
2019
6 628
1
328 434
114 658
13 680
61 782
138 314
19 244
25 349
379 656
324 888
54 768
379 656
2018
8 385
300 549
109 848
11 837
60 016
118 848
17 933
21 443
348 310
292 884
55 426
348 310
Nedbank Group remains committed to grow its retail and commercial deposits, while managing the funding profile
DEPOSITS BY CLUSTER
(Rbn)
9,5%
29,5
904,4
16,4
0,6
0,8
31,3
825,8
9,0%
5,1%
1,4%
2,5%
34,3%
2018
CIB
RBB
Wealth
Africa Regions
Centre
2019
• Deposits grew by 9,5% to R904,4bn, with total funding-related liabilities increasing by 9,4% to R964,1bn.
» With 93,8% of all funding-related liabilities emanating from client deposits, Nedbank’s loan-to-deposit ratio improved to 88,1%
as growth in deposits outpaced growth in loans and advances.
» RBB and CIB grew deposits faster than nominal GDP of 4,4%, with growth rates of 5,1% and 9,0%, respectively. Wealth
grew deposits by 1,4% and Africa Regions by 2,5% as a result of softer markets in these jurisdictions. The Centre grew
by 34,3%, largely driven by growth in NCDs on the back of increased appetite for duration, based on client interest rate
expectations and slower economic growth.
» Transactional deposits increased by 1,9% while investment deposits increased by 8,0% as retail and commercial clients
managed more liquidity into non-transactional term investments. RBB transactional deposits grew by 4,3% while it grew
non-transactional investment deposits faster at 5,1%. CIB transactional deposits remained flat while non-transactional
investment deposits grew by 10,9%. Slow economic growth and the search for higher yields in a weak economic environment
were the primary drivers for commercial depositors rotating out of short-term working capital or transactional deposits into
longer-term non-transactional investment deposits.
126
NEDBANK GROUP – ANNUAL RESULTS 2019
SEGMENTAL BREAKDOWN
Rm
Current accounts
Savings accounts
Other deposits and loan accounts
Call and term deposits
Fixed deposits
Cash management deposits
Other deposits
Foreign currency liabilities
Negotiable certificates of deposit
Macro fair-value hedge accounting adjustments
Deposits received under repurchase agreements
Total amounts owed to depositors
Comprises:
– Amounts owed to clients
– Amounts owed to banks
Total amounts owed to depositors
Nedbank Group
Corporate and
Investment Banking
2019
86 199
32 586
614 909
325 730
66 735
75 748
146 696
25 734
118 984
326
25 644
904 382
846 625
57 757
904 382
2018
85 267
32 442
573 103
305 251
66 314
73 659
127 879
23 316
89 919
(120)
21 877
825 804
765 516
60 288
825 804
2019
6 628
1
328 434
114 658
13 680
61 782
138 314
19 244
25 349
379 656
324 888
54 768
379 656
2018
8 385
300 549
109 848
11 837
60 016
118 848
17 933
21 443
348 310
292 884
55 426
348 310
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
Retail and Business Banking
Wealth
Nedbank Africa Regions
Centre
2019
69 996
10 661
252 231
187 061
49 079
10 979
5 112
6 013
2018
67 200
10 141
240 128
172 663
52 385
10 497
4 583
5 051
2019
1 838
21 130
17 070
12 964
677
1 384
2 045
22
2018
1 777
21 354
16 354
11 662
669
1 939
2 084
10
338 901
322 520
40 060
39 495
339 359
(458)
338 901
321 244
1 276
322 520
40 054
6
40 060
39 486
9
39 495
2019
7 645
794
17 335
11 044
3 299
1 524
1 468
455
3 699
295
30 223
28 827
1 396
30 223
2018
7 846
947
16 275
11 075
1 424
1 136
2 640
322
3 648
434
29 472
28 341
1 131
29 472
2019
92
(161)
3
79
(243)
2018
59
(203)
3
(1)
71
(276)
115 285
326
86 271
(120)
115 542
86 007
113 497
2 045
115 542
83 561
2 446
86 007
DEPOSITS BY PRODUCT
(Rbn)
CONTRIBUTION
(%)
9,5%
21,9
17,9
825,8
3,0
20,5
0,1
0,4
52,2
2,4
904,4
1,9%
6,7%
0,4%
0,6%
21,7%
10,4%
36,0
13,2
3,6
7,4
2019
Current and cash management
deposits
Call and term deposits
2018
Current
and cash
management
deposits
Call and
term
deposits
Savings
accounts
Fixed
deposits
NCDs and
other
deposits
Foreign
currency
liabilities
2019
Fixed deposits
Savings accounts
Negotiable certificates of deposit
Other
» Call and term deposits grew by 6,7% while savings and fixed deposits grew marginally. NCDs and other deposits, which include
structured deposits, grew by 21,7% as clients lengthened their deposit duration in an environment of slow growth where interest rate
expectations have started to favour the downside.
» Foreign currency liabilities, which represent only 2,8% of Nedbank’s total deposits, increased by 10,4%. It should be noted that foreign
currency liabilities are largely matched against foreign currency assets, resulting in an insignificant foreign currency mismatch when
expressed as a percentage of the total balance sheet.
» Nedbank has maintained a strong balance sheet position in 2019 as observed through the funding profile, liquidity buffers and key
liquidity risk metrics.
NEDBANK GROUP – ANNUAL RESULTS 2019
127
Market share as per BA900
HOUSEHOLD DEPOSITS1 (2016–2019)
(%)
NON-FINANCIAL CORPORATE DEPOSITS2 (2016–2019)
(%)
,
9
6
1
9
,
1
2
,
9
8
1
,
0
2
2
,
3
0
2
,
5
6
1
,
7
4
2
,
3
7
2
,
0
7
1
,
5
4
1
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
WHOLESALE DEPOSITS3 (2016–2019)
(%)
FOREIGN CURRENCY LIABILITIES4 (2016–2019)
(%)
,
2
3
2
,
4
8
1
2
,
1
2
3
,
1
2
,
9
5
1
,
0
2
1
,
6
4
1
,
4
6
2
1
,
6
1
,
9
0
3
Nedbank
FirstRand
Standard Bank
Absa
Other
Nedbank
FirstRand
Standard Bank
Absa
Other
1
Includes 'households' as per the PA BA900 return.
2 Includes 'private non-financial corporate sector deposits', 'unincorporated businesses' and 'non-profit and charities' as per the PA BA900 return.
3 Includes 'insurers', 'pension funds', 'private financial corporate sector deposits', 'collateralised borrowings' and 'repurchase deposits' as per the PA BA900 return.
4 Includes 'foreign currency deposits' and 'foreign currency funding' as per the PA BA900 return.
•
•
In 2019 Nedbank’s funding mix tilted towards increased funding from commercial and wholesale deposits. These depositors, through
increased appetite for term products, contributed to a stronger contractual funding profile, where Nedbank’s quarterly average
long-term funding ratio of 30,2% compared favourably with the industry average of approximately 26,5%. The increase in commercial
and wholesale funding contributions, which supported a stronger funding and liquidity profile, was offset by a reduction in funding
contributions from households, capital markets and foreign funding sources, where the latter sources of funding are typically
more expensive.
In 2020 Nedbank will continue to focus on growing retail and commercial deposits, with a focus on providing competitive and innovative
transactional and investment products, as well as an ongoing emphasis on meeting client needs through product, pricing, innovation
and digital client experiences.
NEDBANK GROUP’S DEPOSIT MIX
(%)
6,8
6,6
37,4
20,2
R825,8bn
6,4
6,4
19,3
R904,4bn
38,4
29,0
2018
29,5
2019
Wholesale
Commercial
Household
Capital markets
Foreign funding
128
NEDBANK GROUP – ANNUAL RESULTS 2019
LIQUIDITY RISK AND FUNDING
SUMMARY OF NEDBANK GROUP LIQUIDITY RISK AND FUNDING PROFILE
Total sources of quick liquidity
Total HQLA
Other sources of quick liquidity
Total sources of quick liquidity (as a percentage of total assets)
Long-term funding ratio (three-month average)
Senior unsecured debt including green bonds
Green bonds
Total capital market issuance (excluding additional tier 1 capital)
Reliance on negotiable certificates of deposit (as a percentage of total deposits)
Reliance on foreign funding currency deposits (as a percentage of total deposits)
Loan-to-deposit ratio
Basel III liquidity ratios
LCR1
Minimum regulatory LCR requirement
NSFR2
Minimum regulatory NSFR requirement
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
2019
227 713
177 985
49 728
19,9
30,2
42 295
2 644
59 713
13,2
2,8
88,1
125,0
100,0
113,0
100
2018
213 255
162 678
50 577
20,4
26,5
39 254
55 587
10,9
2,8
89,2
109,4
90,0
114,0
100
(Rm)
(Rm)
(Rm)
(%)
(%)
(Rm)
(Rm)
(Rm)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
1 Only banking and/or deposit-taking entities are included in the group LCR and the group ratio represents an aggregation of the relevant individual net cash
outflows (NCOF) and the individual HQLA portfolios across all banking and/or deposit-taking entities, where surplus HQLA holdings in excess of the minimum
requirement of 100% have been excluded from the aggregated HQLA number in the case of all non-SA banking entities. The above figures reflect the simple
average of daily observations over the quarter ending December 2019 for Nedbank Limited and the simple average of the month-end values at 31 October 2019,
30 November 2019 and 31 December 2019 for all non-SA banking entities.
2 Only banking and/or deposit-taking entities are included in the group NSFR and the group data represents a consolidation of the relevant individual assets, liabilities
and off-balance-sheet items.
• Nedbank Group remains well funded with a strong liquidity position, underpinned by a significant quantum of long-term funding,
an appropriately sized surplus liquid-asset buffer, a strong loan-to-deposit ratio consistently below 100% and a low reliance on
interbank and foreign currency funding.
• The group's quarterly average LCR exceeded the minimum regulatory requirement of 100% applicable in 2019, with the group
maintaining appropriate operational buffers designed to absorb seasonal and cyclical volatility in the LCR.
» The LCR, calculated using the simple average of daily observations over the quarter ending December 2019 for Nedbank Limited
and the simple average of the month-end values at 31 October 2019, 30 November 2019 and 31 December 2019 for all non-SA
banking entities, was 125,0%.
— Nedbank's portfolio of LCR-compliant HQLA increased to a quarterly average of R178,0bn, up from 2018 when the portfolio
totalled R162,7bn.
— The increase in the LCR is attributable to growth in the HQLA portfolio as well as a decrease in net cash outflows. The increase in
the long-term funding profile was the primary contributor to the decrease in LCR net cash outflows.
— Nedbank will continue to procure additional HQLA to support balance sheet growth while maintaining appropriately sized
surplus liquid-asset buffers.
NEDBANK GROUP LCR EXCEEDS MINIMUM REGULATORY REQUIREMENTS
109,4
162,7
148,7
178,0
125,0
142,4
2018
2019
HQLA (Rbn)
Net cash outflows (Rbn)
LCR (%)
NEDBANK GROUP – ANNUAL RESULTS 2019
129
» In addition to the HQLA portfolio maintained for LCR purposes, Nedbank also identifies other sources of quick liquidity, which can
be accessed in times of stress. Nedbank’s combined portfolio of HQLA and other sources of quick liquidity collectively amounted to
R227,7bn at December 2019 and represented 19,9% of total assets.
Nedbank Group has significant sources of quick liquidity
TOTAL SOURCES OF QUICK LIQUIDITY
(Rbn)
6,8%
227,7
(1,8%)
49,7
213,3
50,6
9,4%
162,7
178,0
2018
2019
Total HQLA
Other sources of quick liquidity
OTHER SOURCES OF QUICK
LIQUIDITY CONTRIBUTION
(%)
2
12
R49,7bn
43
36
7
2019
Corporate bonds and listed equities
Unencumbered trading securities
Price-sensitive overnight loans
Other banks’ paper and
unutilised bank credit lines
Other assets
• Nedbank exceeded the minimum NSFR regulatory requirement of 100% effective from 1 January 2018, with a December 2019 ratio
of 113,0%. The slight decrease in the NSFR is largely attributable to business-as-usual mix changes across both assets and liabilities.
The key focus in terms of the NSFR is to achieve ongoing compliance within the context of balance sheet optimisation.
NEDBANK GROUP NSFR EXCEEDS MINIMUM REGULATORY REQUIREMENTS
114,0
664,5
582,7
113,0
709,7
628,3
2018
2019
Available stable funding (Rbn)
Required stable funding (Rbn)
NSFR (%)
130
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
» A strong funding profile was maintained in 2019, with Nedbank recording a three-month-average long-term funding ratio of 30,2%
in the last quarter of the year. The focus on proactively managing Nedbank’s long-term funding profile contributed to a strong
balance sheet position and improved liquidity risk metrics. Nedbank has continued to run a more prudent long-term funding profile
when compared with the industry average of approximately 26,5%.
— Nedbank successfully issued R8,9bn in senior unsecured debt, while R5,8bn matured during the year.
Nedbank successfully issued R2,7bn at its green bond auctions in 2019, contributing to overall senior unsecured debt issuance.
— Nedbank issued tier 2 capital instruments of R2,5bn and redeemed R2,5bn during the year, in line with the group’s capital plan.
» While foreign currency funding reliance remains small, at 2,8% of total deposits, Nedbank continues to focus on growing this funding
source in support of funding base diversification where the proceeds can be applied to meet funding requirements for foreign
advances growth at attractive interest rates.
• The group’s 2019 ICAAP, ILAAP and Recovery Plan Reports were updated and approved by the board in accordance with annual
business-as-usual processes and submitted to the Prudential Authority.
NEDBANK GROUP FUNDING AND LIQUIDITY PROFILE IS UNDERPINNED BY STRONG LIQUIDITY RISK METRICS
93,9
28,7
72,4
92,8
29,6
92,1
27,0
35,6
89,2
26,5
54,2
88,1
30,2
78,6
9,4
9,1
10,0
4,0
3,1
2015
2016
2017
2018
2019
Loan-to-deposit
ratio (%)
Three-month-average
long-term funding
ratio (%)
Annual growth
in deposits (Rbn)
Annual growth
in capital market issuance,
excluding additional tier 1
capital (Rbn)
NEDBANK GROUP – ANNUAL RESULTS 2019
131
Change
(%)
EQUITY ANALYSIS
ANALYSIS OF CHANGES IN NET ASSET VALUE
Balance at the beginning of the year
Impact of adopting IFRS 9, IFRS 15 and IFRS 16, net of taxation
IFRS 9 and IFRS 15
IFRS 16
Additional shareholder value
Profit attributable to ordinary equity holders
Currency translation movements
Exchange differences on translating foreign operations – foreign subsidiaries1
Exchange differences on translating foreign operations – ETI1
Share of other comprehensive income of investments accounted for using the equity
method – ETI2
Fair-value adjustments
Fair-value adjustments on debts instruments
Share of other comprehensive income of investments accounted for using the equity
method2
Defined-benefit fund adjustment
Share of other comprehensive income of investments accounted for using the equity
method (included in other distributable reserves)
Other direct reserve movements
Transactions with ordinary shareholders
Dividends paid
Odd-lot repurchase
Equity-settled share-based payments
Net repurchase of share capital and premium and capitalisation of reserves
Transaction with non-controlling shareholders
Exchange differences on translating foreign operations1
Other transaction with non-controlling shareholders
Additional tier 1 capital instruments
Other movements
Balance at the end of the year
2019
91 271
(658)
(658)
11 017
12 001
(855)
2
(70)
(787)
(470)
(232)
(238)
300
(145)
186
(6 565)
(7 112)
591
(44)
(134)
(91)
(43)
3 500
18
98 449
2018
88 539
(3 232)
(3 232)
13 175
13 376
191
160
429
(398)
60
(20)
80
(345)
(16)
(91)
(8 004)
(6 744)
(1 979)
177
542
41
(140)
181
750
2
91 271
1 Exchange differences on translating foreign operations disclosed in the statement of other comprehensive income of R159m (December 2018: R449m).
2 Share of other comprehensive losses of investments accounted for using the equity method as disclosed in the statement of comprehensive income of R1 025m
(December 2018: R318m).
MOVEMENTS IN GROUP FOREIGN CURRENCY TRANSLATION RESERVE
Balance at the beginning of the year
Foreign currency translation reserve (FCTR)
ETI
Banco Único
Other subsidiaries
Balance at the end of the year
EXCHANGE RATES
Change
(%)
2019
(1 389)
(855)
(857)
(37)
39
2018
(1 580)
191
31
7
153
(2 244)
(1 389)
UK pound to rand
US dollar to rand
US dollar to naira
Rand to naira
US dollar to RTGS dollar (Zimbabwe)1
RTGS dollar (Zimbabwe) to rand1
Change (%)
4,5
9,1
(8,3)
Average
2019
18,43
14,44
361,64
25,05
n/a
n/a
2018
Change (%)
17,64
13,24
361,50
27,31
n/a
n/a
0,6
(2,6)
0,3
3,9
>100
(77,4)
Closing
2019
18,43
14,01
364,47
26,05
16,77
0,84
2018
18,32
14,38
363,50
25,08
3,88
3,71
1
In terms of hyperinflation accounting, the inflation-indexed income statement is translated at the year-end closing spot exchange rate.
132
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
CAPITAL MANAGEMENT
REGULATORY CAPITAL ADEQUACY AND LEVERAGE
CET1 CAPITAL RATIO TREND ANALYSIS
1,0
(0,6)
1,1
(0,6)
(0,2)
(0,5)
(0,1)
CET1 target range: 10,5–12,5%
(0,2)
(0,1)
11,7
11,3
11,5
9 The group capital
ratios are well above
regulatory minima and
have strengthened since
June 2019.
9 An optimal capital
structure has been
maintained through
the issuance of
additional tier 1 and
tier 2 capital instruments
at favourable pricing.
Dec
2018
IFRS 16
impact
Organic
profit
Dividends
paid
Intangibles
RWA
increase
Jun
2019
Organic
profit
Dividends
paid
RWA
increase
Intangibles
Dec
2019
Nedbank manages capital levels incorporating its own internal assessment of the level of risk being taken, expectations of the rating
agencies, the requirements of the regulators and the returns expected by shareholders. Nedbank also seeks to ensure that its capital
structure makes use of the range of capital instruments and capital management activities available in optimising the financial efficiency
and loss absorption capacity of its capital base.
Nedbank performed extensive and comprehensive stress testing during this period and concluded that the group remains well
capitalised relative to its business activities, the board’s strategic plans, risk appetite, risk profile and the external environment in which
the group operates.
The group remains well capitalised at levels significantly above the minimum regulatory requirements. The CET1 ratio of 11,5% was
impacted by the implementation of IFRS 16 on 1 January 2019 (R658m reduction in equity and R3,4bn increase in RWA), the ongoing
investment in software development costs as part of the group’s Managed Evolution programme, the adverse impact of changes in
foreign currency translation reserves, an increase in RWA due to migration in certain credit portfolios, credit model updates and capital
optimisation initiatives.
Nedbank Group
Including unappropriated profits
Total CAR
Total tier 1
CET1
Surplus tier 1 capital
Leverage
Dividend cover
Cost of equity
Excluding unappropriated profits
Total CAR
Total tier 1
CET1
Nedbank Limited
Including unappropriated profits
Total CAR
Total tier 1
CET1
Surplus tier 1 capital
Excluding unappropriated profits
Total
Total tier 1
CET1
SARB
minimum1
Internal
targets
2019
2018
(%)
(%)
(%)
(Rm)
(times)
(times)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(Rm)
(%)
(%)
(%)
> 14
> 12
10,5–12,5
< 20
1,75–2,25
> 14
> 12
10,5–12,5
< 25
11,50
9,25
7,50
11,50
9,25
7,50
15,0
12,8
11,5
22 245
15,0
1,84
14,1
14,8
12,6
11,4
15,5
12,8
11,2
18 202
15,1
12,4
10,8
14,8
12,5
11,7
21 460
14,7
1,97
14,1
14,2
11,9
11,1
15,7
12,7
11,6
18 185
15,2
12,3
11,1
1 SARB minimum requirements for 2019 reflect the phase-in of the conservation buffer at 2,5% and are disclosed excluding bank-specific Pillar 2b and D-SIB
capital requirements.
NEDBANK GROUP – ANNUAL RESULTS 2019
133
OVERVIEW OF RISK-WEIGHTED ASSETS
Rm
Credit risk
Standardised Approach (TSA)
Supervisory Slotting Approach
Advanced Internal Ratings-based
Approach
Counterparty credit risk
Current Exposure Method
Credit valuation adjustment
Equity positions under Simple
Risk-weight Approach
Securitisation exposures in banking book
Internal Ratings-based Approach
External Ratings-based Approach,
including Internal Assessment Approach
Market risk
Standardised Approach
Internal Model Approach
Operational risk
Standardised Approach
Advanced Measurement Approach (AMA)
Floor adjustment
Amounts below the thresholds for
deduction (subject to 250% risk
weighting)
Other assets (100% risk weighting)
Total
Nedbank Group
Nedbank Limited1
2019
RWA
419 286
35 052
10 234
MRC2
48 218
4 031
1 177
2018
RWA
390 688
38 598
8 612
2019
RWA
MRC2
2018
RWA
348 376
40 063
318 549
133
9 290
15
1 068
150
8 612
374 000
43 010
343 478
338 953
38 980
309 787
9 713
9 713
16 476
41 021
589
382
207
22 199
2 027
20 172
74 139
7 208
63 539
3 392
1 117
1 117
1 895
4 717
68
44
24
2 553
233
2 320
8 526
829
7 307
390
5 072
5 072
10 378
35 205
504
300
204
31 489
4 204
27 285
71 083
6 599
60 838
3 646
9 456
9 456
15 668
26 534
589
382
207
20 971
699
20 272
62 795
1
60 059
2 735
1 087
1 087
1 802
3 051
68
44
24
2 412
81
2 331
7 221
< 1
6 907
314
15 228
30 074
628 725
1 751
3 458
72 303
14 942
27 265
586 626
1 633
24 867
510 889
188
2 860
58 752
4 855
4 855
9 683
22 677
504
300
204
28 141
1 162
26 979
60 720
5
57 594
3 121
2 167
23 835
471 131
1 Nedbank Limited refers to the SA reporting entity in terms of regulation 38 (BA700) of the regulations relating to banks, issued in terms of the Banks Act
(Act No 94 of 1990).
2 Total MRC is measured at 11,5%, in line with the transitional requirements, and excludes bank-specific Pillar 2b and D-SIB capital requirements.
• Credit RWA increased by R28,6bn, largely as a result of book growth, model updates and the rating migrations of certain counters
within the CIB portfolio.
• Counterparty credit risk and credit valuation adjustment RWA increased by R4,6bn and R6,1bn respectively, driven by an increase in
hedging activities and the performance of the rand against major currencies over the period.
• Equity RWA growth of R5,8bn, includes new investments and fair-value revaluations of existing equity exposures.
• Trading market RWA decrease of R9,3bn, driven primarily by lower exposures to foreign exchange, interest rates, inflation and credit
spreads on the back of reduced trading activity during the period.
• Operational RWA growth of R3,1bn, mainly driven by the migration to the second-generation model, which resulted in an increase in the
AMA capital as well as an increase in TSA capital, driven by movements in GOI.
134
NEDBANK GROUP – ANNUAL RESULTS 2019
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
SUMMARY OF REGULATORY QUALIFYING CAPITAL AND RESERVES1
Rm
Including unappropriated profits
Total tier 1 capital
CET1
Share capital and premium
Reserves
Minority interest: Ordinary shareholders
Deductions
Additional tier 1 capital
Preference share capital and premium
Perpetual subordinated debt instruments
Regulatory adjustments
Tier 2 capital
Subordinated debt instruments
General allowance for credit impairment
Regulatory adjustments
Total capital
Excluding unappropriated profits
Tier 1 capital
CET1 capital
Total capital
Nedbank Group
Nedbank Limited
2019
2018
2019
2018
80 401
72 506
18 577
68 534
848
(15 453)
7 895
1 594
6 850
(549)
13 840
13 810
300
(270)
94 241
79 315
71 420
93 155
73 523
68 625
17 792
65 493
1 038
(15 698)
4 898
2 125
3 350
(577)
13 428
13 797
289
(658)
86 951
70 068
65 170
83 496
65 459
57 015
19 221
50 521
(12 727)
8 444
1 594
6 850
13 812
13 810
2
59 959
54 484
19 221
47 375
(12 112)
5 475
2 125
3 350
13 799
13 797
2
79 271
73 758
63 532
55 088
77 344
57 730
52 255
71 529
1 For comprehensive 'composition of capital' and 'capital instruments main features' disclosure please refer
to nedbank.co.za/content/nedbank/desktop/gt/en/aboutus/information-hub/capital-and-risk-management-reports.html.
• Nedbank Group maintained a solid capital adequacy position, with the capital ratios having improved since 30 June 2019 after
absorbing the adverse impact of IFRS 16 implemented in January 2019, adverse changes in foreign currency translation reserves,
further investment in software development costs as part of the group’s Managed Evolution programme, and an increase in RWA due
to migration in certain credit portfolios and credit model updates. The CET1 capital was supported by reasonable earnings generation
in a tough macroeconomic environment, an appropriate dividend policy and capital optimisation across the balance sheet. The group’s
sound capital structure is further supported by the following:
» A focus on issuing fully loss-absorbent capital, with Basel III fully compliant capital making up 98% of the group’s total capital
structure, having issued R19,3bn of new-style tier 2 capital and R6,9bn of new-style additional tier 1 capital since the implementation
of Basel III in 2013.
» RWA density of 55% (RWA/total assets), which compares favourably with local and international peers.
• The group’s tier 1 capital position was positively impacted by the issuance of new-style additional tier 1 instruments of R3,5bn in 2019,
offset by the further grandfathering of preference shares in January 2019, in line with the Basel III transitional arrangements.
• The group’s total capital position was further impacted by the redemption of new-style tier 2 capital instruments of R2,5bn and the
issuance of new-style tier 2 capital instruments of R2,5bn in 2019, in line with the group’s capital plan.
• Nedbank Group’s gearing (including unappropriated profits) remains below the Regulatory Leverage Ratio Framework requirement of
less than 25 times at 15,0 times.
NEDBANK GROUP – ANNUAL RESULTS 2019
135
REGULATED BANKING SUBSIDIARIES
Nedbank Group banking subsidiaries are well capitalised for the environments in which they operate, with CARs well in excess of
respective host regulators’ minimum requirements.
Africa Regions
Banco Único
Nedbank Namibia Limited
Nedbank (Swaziland) Limited
Nedbank (Lesotho) Limited
Nedbank (Malawi) Limited
Nedbank (Zimbabwe) Limited
Isle of Man
Nedbank Private Wealth (IOM) Limited
2019
2018
Total capital
requirement
(host country)
%
Total capital
ratio
%
RWA
Rm
11,0
11,0
8,0
8,0
15,0
12,0
11,0
3 863
13 047
4 966
2 051
349
1 042
7 627
16,7
15,0
17,3
26,4
22,1
21,3
15,7
RWA
Rm
3 901
12 647
4 654
2 282
364
3 5211
7 607
Total capital
ratio
%
15,8
18,0
17,3
20,8
28,7
29,91
14,9
1 As reported incountry in the December 2018 BA Regulatory Return, before any functional currency changes.
ECONOMIC CAPITAL ADEQUACY
NEDBANK GROUP ECONOMIC CAPITAL REQUIREMENT
Credit risk
Market risk
Business risk
Operational risk
Insurance risk
Other assets risk
Minimum economic capital requirement
Add: Stress-tested capital buffer (10%)
Total economic capital requirement
AFR
Tier A capital
Tier B capital
Total surplus AFR
AFR:total economic capital requirement (%)
2019
2018
Rm
Mix %
Rm
Mix %
43 847
8 088
7 960
4 770
472
3 166
68 303
6 830
75 133
97 184
74 977
22 207
22 051
129
64
12
12
7
< 1
5
100
100
77
23
38 476
8 094
7 223
3 972
474
2 958
61 197
6 120
67 317
90 350
71 125
19 225
23 033
134
63
13
12
6
1
5
100
100
79
21
• Nedbank Group’s minimum economic capital requirement increased by R7,1bn during the year, primarily due to the following:
» A R5,4bn increase in credit risk economic capital largely as a result of book growth and rating migrations of certain portfolios within
CIB. Counterparty credit risk increased, as a result of an increase in hedging activities and the performance of the rand against
major currencies over the period.
» Respective increases of R737m and R798m in business risk economic capital and operational risk economic capital, which were
driven mainly by annual model parameter updates, reflective of a higher risk environment.
• Nedbank Group’s AFR increased R6,8bn in 2019, mainly as a result of the following:
» Financial reserves increasing R3,0bn post dividend payments to shareholders of R7,2bn.
» A R3,0bn increase in tier B AFR following the issuance of R3,5bn new-style additional tier 1 capital and the issuance of R2,5bn of
new-style tier 2 capital instruments, which was offset by the grandfathering of old-style preference shares of R531m and the
redemption of new-style tier 2 capital instruments of R2,5bn.
136
NEDBANK GROUP – ANNUAL RESULTS 2019
EXTERNAL CREDIT RATINGS
Outlook
Foreign currency deposit ratings
Long-term
Short-term
Local currency deposit ratings
Long-term
Short-term
National scale rating
Long-term deposits
Short-term deposits
STATEMENT OF
FINANCIAL POSITION
ANALYSIS
Standard & Poor’s
Moody’s Investors Service
Nedbank
Limited
Sovereign
rating SA
Nedbank
Limited
Sovereign
rating SA
Nov 2019
Nov 2019
Nov 2019
Nov 2019
Negative
Negative
Negative
Negative
BB
B
BB
B
BB
B
BB+
B
zaAA+
zaA-1+
zaAA+
zaA-1+
Baa3
P-3
Baa3
P-3
Aa1.za
P-1.za
Baa3
P-3
Baa3
P-3
NEDBANK GROUP – ANNUAL RESULTS 2019
137
138
NOTESNEDBANK GROUP – ANNUAL RESULTS 2019 SUPPLEMENTARY
INFORMATION
SUPPLEMENTARY INFORMATION
140
Earnings per share and weighted-average shares
141
Nedbank Group employee incentive schemes
142 Long-term debt instruments
142
Holders of additional tier 1 capital instruments
143
Shareholders’ analysis
144
146
147
147
Basel III balance sheet credit exposure by business cluster and asset class
Nedbank Limited consolidated statement of comprehensive income
Nedbank Limited consolidated statement of financial position
Nedbank Limited consolidated financial highlights
148
Definitions
150
Abbreviations and acronyms
IBC Company details
NEDBANK GROUP – ANNUAL RESULTS 2019
139
EARNINGS PER SHARE AND WEIGHTED-AVERAGE SHARES
Earnings per share
December 2019
Earnings for the year
Basic
Diluted
basic
Headline
Diluted
headline
12 001
12 001
12 506
12 506
Weighted-average number of ordinary shares
479 960 027
487 478 442
479 960 027
487 478 442
Earnings per share (cents)
December 2018
Earnings for the year
2 500
2 462
2 605
2 565
13 376
13 376
13 495
13 495
Weighted-average number of ordinary shares
483 240 926
493 159 191
483 240 926
493 159 191
Earnings per share (cents)
2 768
2 712
2 793
2 736
Basic earnings and headline earnings per share are calculated by dividing the relevant earnings amount by the weighted-average
number of shares in issue.
Fully diluted basic earnings and fully diluted headline earnings per share are calculated by dividing the relevant earnings amount by the
weighted-average number of shares in issue after taking the dilutive impact of potential ordinary shares to be issued into account.
Number of weighted-average dilutive potential ordinary shares (000)
Traditional schemes
Nedbank Group Restricted-share Scheme (2005)
Nedbank Group Matched-share Scheme
Total BEE schemes
BEE schemes – South Africa
Community
Black executives
Black management
BEE schemes – Namibia
Total
2019
2018
Weighted-
average
dilutive
shares
Weighted-
average
dilutive
shares
5 808
4 200
1 608
1 711
1 703
1 690
12
1
8
7 519
8 119
6 426
1 693
1 799
1 785
1 690
83
12
14
9 918
Potential
shares1
12 569
9 415
3 154
1 845
1 812
1 690
116
6
33
14 414
1 Potential shares are the total number of shares arising from historic grants, schemes or awards, available for distribution. Potential shares are the total number of
shares arising from historic grants, schemes or awards, available for distribution.
Matched shares
Instrument expiry date
1 April 2020
1 April 2021
1 April 2022
Matched shares outstanding not exercised at 31 December 2019
Movements due to shares exercised/forfeited during the year
Total potential shares
Weighted-average dilutive shares applicable for the year
Number of
shares
672 956
633 687
928 799
2 235 442
918 242
3 153 684
1 608 451
The obligation to deliver the matched shares issued under the voluntary and compulsory share scheme is subject to time and other
performance criteria.
This obligation exists over 31 December 2019 and therefore has a dilutive effect.
Matched shares are not issued and are therefore not recognised as treasury shares. However, until they are issued, there remains a
potential dilutive effect.
140
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK GROUP EMPLOYEE INCENTIVE SCHEMES
for the period ended
SUPPLEMENTARY
INFORMATION
Nedbank Group employee incentive schemes
Summary by scheme
Nedbank Group Restricted-share Scheme (2005)
Nedbank Group Matched-share Scheme (2005)
Instruments outstanding at the end of the year
Analysis
Performance-based – restricted shares
Non-performance-based – restricted shares
Performance-based – matched shares (CBSS1)
Non-performance-based – matched shares (VBSS2)
Instruments outstanding at the end of the year
Movements
Instruments outstanding at the beginning of the year
Granted
Exercised
Surrendered
Instruments outstanding at the end of the year
1 Compulsory Bonus Share Scheme.
2 Voluntary Bonus Share Scheme.
P Performance-based instruments.
NEDBANK GROUP (2005) RESTRICTED- AND
MATCHED-SHARE SCHEMES
Restricted shares1
Details of instruments granted and not exercised at 31 December 2019 and the resulting dilutive effect:
Instrument expiry date
16 March 2020
17 March 2020
11 August 2020
12 August 2020
16 March 2021
15 March 2021
17 August 2021
18 August 2021
15 March 2022
16 March 2022
16 August 2022
17 August 2022
Restricted shares not exercised at 31 December 2019
Unallocated shares
Treasury shares
Average shares exercised or forfeited during the year
Total potential shares
Weighted-average dilutive shares applicable for the year
2019
2018
9 067 832
2 235 442
11 303 274
5 094 706 P
3 973 126
1 544 042 P
691 400
11 303 274
11 548 674
4 421 294
(4 265 176)
(401 518)
11 303 274
9 369 675
2 178 999
11 548 674
5 168 775 P
4 200 900
1 493 277 P
685 722
11 548 674
11 646 502
3 699 952
(3 234 541)
(563 239)
11 548 674
Number of
shares
1 565 247 P
1 267 795
44 153 P
39 423
1 440 889 P
1 167 063
102 600 P
85 954
1 879 376 P
1 350 470
P
62 441
62 421
9 067 832
144 725
9 212 557
202 527
9 415 084
4 200 040
1 Restricted shares are issued at a market price for no consideration to participants, and are held by the scheme until the expiry date (subject to achievement of
performance conditions). Participants have full rights and receive dividends.
P Performance-based instruments.
NEDBANK GROUP – ANNUAL RESULTS 2019
141
LONG-TERM DEBT INSTRUMENTS
Instrument code
Subordinated debt
Callable notes (rand-denominated)
Long-term debenture (Namibian dollar-denominated)
Callable notes (MZN-denominated)
Securitised liabilities – callable notes (rand-denominated)
Senior unsecured debt – senior unsecured notes (rand-denominated)
Unsecured debentures (rand-denominated)
Green bonds (rand-denominated)
Total long-term debt instruments in issue
2019
14 229
13 912
317
3 152
39 651
37
2 644
59 713
2018
14 233
13 905
316
12
2 069
39 254
31
55 587
Further information can be accessed on our group website:
nedbank.co.za/content/nedbank/desktop/gt/en/aboutus/information-hub/capital-and-risk-management-reports.html
nedbank.co.za/content/nedbank/desktop/gt/en/aboutus/debt-investor/debt-investors-programme.html
HOLDERS OF ADDITIONAL TIER 1 CAPITAL INSTRUMENTS
The group issued new-style (Basel III-compliant) additional tier 1 capital instrument as follows:
Instrument code
Instrument terms
2019
2018
Subordinated
Callable notes (rand-denominated)
NEDT1A
NEDT1B
NGLT1A
NGLT1B
NGT103
NGT104
NGT105
3-month JIBAR + 7,00% per annum
3-month JIBAR + 6,25% per annum
3-month JIBAR + 5,65% per annum
3-month JIBAR + 4,64% per annum
3-month JIBAR + 4,40% per annum
3-month JIBAR + 4,50% per annum
3-month JIBAR + 4,25% per annum
1 500
500
600
750
671
1 829
1 000
1 517
505
613
762
Total non-controlling interest attributable to additional
tier 1 capital instruments
6 850
3 397
The additional tier 1 notes represent perpetual, subordinated instruments, with no redemption date. The instruments are redeemable,
subject to regulatory approval, at the sole discretion of the issuer from the applicable call date and following a regulatory or tax event.
The payment of interest is at the discretion of the issuer and interest payments are non-cumulative. In addition, in certain conditions the
regulator may prohibit Nedbank from making interest payments. Accordingly, for accounting purposes the instruments are classified as
equity instruments and disclosed as part of the non-controlling interest.
142
NEDBANK GROUP – ANNUAL RESULTS 2019
SHAREHOLDERS’ ANALYSIS
Register date:
Authorised share capital:
Issued share capital:
27 December 2019
600 000 000 shares
497 053 536 shares
Major shareholders/managers
Old Mutual Life Assurance Company (SA) Limited and associates (includes funds
managed on behalf of other beneficial owners)1
Nedbank Group treasury shares
BEE trusts
Eyethu scheme – Nedbank SA
Omufima scheme – Nedbank Namibia
Nedbank Group (2005) Restricted- and Matched-share Schemes
Nedbank Namibia Limited
Public Investment Corporation (SA)
Coronation Fund Managers (SA)
Allan Gray Investment Council (SA)
BlackRock Incorporated (International)
The Vanguard Group Incorporated (international)
Sanlam Investment Management Proprietary Limited (SA)
Dimensional Fund Advisors (US, UK and AU)
Lazard Asset Management (International)
GIC Asset Management Proprietary Limited (international)
Major beneficial shareholders
Old Mutual Life Assurance Company (SA) Limited and associates (SA)1
Government Employees Pension Fund (SA)
GIC Asset Management Proprietary Limited (SG)
Geographical distribution of shareholders
Domestic
South Africa
Namibia
Unclassified
Foreign
United States of America
Asia
Europe
United Kingdom and Ireland
Other countries
Total shares listed
Less: Treasury shares held
Net shares reported
Number of
shares
2019
% holding
2018
% holding
119 908 542
15 879 157
6 619 088
6 466 786
152 302
9 212 557
47 512
53 464 674
37 407 848
27 048 653
17 839 104
14 888 988
11 741 655
10 597 596
10 590 138
10 437 041
119 764 615
54 095 899
10 437 041
366 809 012
351 196 730
9 095 314
6 516 968
130 244 524
65 892 178
22 306 373
22 173 199
10 181 196
9 691 578
497 053 536
15 879 157
481 174 379
24,12
3,19
1,33
1,30
0,03
1,85
0,01
10,76
7,53
5,44
3,59
3,00
2,36
2,13
2,13
2,10
24,09
10,88
2,10
73,79
70,65
1,83
1,31
26,21
13,26
4,49
4,46
2,05
1,95
24,54
3,26
1,32
1,29
0,03
1,93
0,01
9,38
7,31
5,14
3,71
2,91
1,88
1,62
2,96
2,65
24,51
9,66
2,67
70,69
67,38
1,47
1,84
29,31
14,89
5,06
4,78
2,96
1,62
100,00
100,00
1 Old Mutual Limited retains a strategic minority shareholding of 19,9% in Nedbank Group, held through its shareholder funds, under the terms of the relationship
agreement. The above shareholding is inclusive of funds held on behalf of other beneficial owners and increased after the Old Mutual Managed Seperation had been
completed as a result of the subsequent odd-lot offer and due to movements in shares held on behalf of policyholders. The relationship agreement with Old Mutual
Limited is available at https://www.nedbank.co.za/content/dam/nedbank/site-assets/AboutUs/About%20Nedbank%20Group/Old%20Mutual/Nedbank%20Old%20
Mutual%20Limited%20Relationship%20Agreement%202018.pdf.
INDEX CLASSIFIED SHAREHOLDING
(December, %)
FOREIGN SHAREHOLDING
(December, %)
,
3
0
1
,
0
2
1
5
,
1
1
,
8
9
1
3
,
1
2
,
8
3
1
,
8
7
1
1
,
8
1
,
3
9
2
,
2
6
2
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
143
SUPPLEMENTARY INFORMATIONNEDBANK GROUP – ANNUAL RESULTS 2019
BASEL III BALANCE SHEET CREDIT EXPOSURE BY BUSINESS
CLUSTER AND ASSET CLASS
Advanced Internal Ratings-based Approach
265 339
162 280
358 726
22 721
7
74 097
CIB,
excluding
Property
Finance
Property
Finance
RBB
Wealth
Nedbank
African
Regions
Centre
Corporate
Specialised lending – HVCRE4
Specialised lending – IPRE5
Specialised lending – project finance
SME – corporate
Public sector entities
Local government and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Securitisation exposure
The Standardised Approach6
Corporate
SME – corporate
Public sector entities
Local government and municipalities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Properties in possession
Non-regulated entities
Total Basel III balance sheet exposure7
Downturn expected loss (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and advances
Excess of downturn expected loss over eligible provisions
142 150
46 501
1 105
16 773
10 906
10 105
37 753
46
–
49 944
8 090
100 448
3 593
37
168
–
18 106
1 569
29 942
141
966
5
129 050
16 995
129 540
31 943
469
160
160
55
55
6 051
4
2 118
42
279
1 727
10 255
84
189
1 862
18 475
1 310
7 413
2 614
5 807
1 331
19 308
44
11
134
31
71 835
2 097
7
–
–
–
42 066
10 513
813
30
7 467
6 626
7 118
731
4 630
4 138
95
284 647
162 280
358 930
41 207
42 168
74 097
7 268
6 851
1 Risk weighting is shown as a percentage of exposure at default (EAD) for the AIRB Approach and as a percentage of total credit extended for The Standardised
Approach (TSA).
2 dEL is in relation to performing loans and advances.
3 Best estimate of expected loss (BEEL) is in relation to defaulted loans and advances.
4 High-volatility commercial real estate.
5 Income-producing real estate.
6 A portion of the legacy Imperial Bank book in Nedbank RBB, Nedbank Private Wealth (UK) and the non-SA banking entities in Africa are covered by TSA.
7 Balance sheet credit exposure includes on-balance-sheet, repurchase and resale agreements and derivative exposure.
Nedbank Group
Dec 2019
Change
weighting1
loss (dEL)2
Downturn
expected
Nedbank Group
Dec 2018
Downturn
expected
loss (dEL)2
(Rm)
883 170
210 389
8 145
108 068
46 505
36 758
16 987
12 151
83 672
39 894
139 305
17 079
129 729
33 851
637
60 701
10 513
1 470
813
30
14 880
9 240
12 925
731
5 961
4 138
150
19 308
963 329
Mix
(%)
91,7
21,8
0,8
11,2
4,8
3,8
1,8
1,3
8,7
4,1
14,5
1,8
13,5
3,5
0,1
6,3
1,1
0,2
0,1
1,5
1,0
1,3
0,1
0,6
0,4
2,0
100,0
(%)
11,3
12,8
26,8
6,4
5,1
12,0
(5,5)
32,2
13,6
134,3
4,9
5,5
9,0
(4,1)
34,4
3,4
33,3
(15,3)
27,0
7,1
6,5
(32,4)
1,3
120,8
14,5
67,1
1,3
19,8
9,9
Risk
(%)
40,5
44,9
112,8
32,1
65,5
50,8
71,6
29,2
10,1
52,0
25,1
62,1
49,1
40,3
92,5
50,0
82,4
95,6
70,7
94,3
61,1
19,9
40,5
42,0
72,4
67,2
6 851
959
119
220
146
214
52
6
17
89
624
786
3 122
497
–
(Rm)
793 243
186 575
6 424
101 610
44 247
32 812
17 967
9 193
73 653
17 026
132 751
16 194
119 014
35 303
474
58 693
7 884
1 736
640
28
13 971
13 660
12 762
331
5 204
2 477
152
24 083
876 171
Mix
(%)
90,5
21,3
0,7
11,6
5,1
3,7
2,1
1,0
8,4
1,9
15,2
1,8
13,6
4,0
0,5
6,8
0,9
0,2
0,1
1,6
1,6
1,5
0,6
0,3
2,7
100
(Rm)
7 268
1 108
124
316
168
238
118
5
19
66
706
776
3 130
494
BEEL3
(Rm)
9 993
867
133
88
289
15
1 348
1 318
5 182
753
9 993
17 261
7 268
9 993
(17 358)
(97)
BEEL3
(Rm)
8 759
496
110
154
147
1 287
1 457
4 470
638
–
8 759
15 610
6 851
8 759
(14 860)
750
144
NEDBANK GROUP – ANNUAL RESULTS 2019
Advanced Internal Ratings-based Approach
265 339
162 280
358 726
22 721
7
74 097
CIB,
excluding
Property
Property
Finance
Finance
RBB
Wealth
Centre
Nedbank
African
Regions
Corporate
Specialised lending – HVCRE4
Specialised lending – IPRE5
Specialised lending – project finance
Local government and municipalities
The Standardised Approach6
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Securitisation exposure
Corporate
SME – corporate
Public sector entities
Sovereign
Banks
Retail mortgage
Retail revolving credit
Retail – other
SME – retail
Properties in possession
Non-regulated entities
Local government and municipalities
Total Basel III balance sheet exposure7
Downturn expected loss (AIRB Approach)
Expected loss performing book
BEEL on defaulted advances
IFRS impairment on AIRB loans and advances
Excess of downturn expected loss over eligible provisions
142 150
46 501
1 105
16 773
10 906
10 105
37 753
46
–
49 944
8 090
100 448
18 106
1 569
3 593
29 942
37
168
–
141
966
5
129 050
16 995
129 540
31 943
469
160
160
55
55
6 051
4
2 118
42
279
1 727
10 255
84
189
1 862
18 475
1 310
7 413
2 614
5 807
1 331
71 835
2 097
7
134
31
–
42 066
10 513
813
30
7 467
6 626
7 118
731
4 630
4 138
95
19 308
44
11
284 647
162 280
358 930
41 207
42 168
74 097
(Rm)
883 170
210 389
8 145
108 068
46 505
36 758
16 987
12 151
83 672
39 894
139 305
17 079
129 729
33 851
637
60 701
10 513
1 470
813
30
14 880
9 240
12 925
731
5 961
4 138
150
19 308
963 329
Mix
(%)
91,7
21,8
0,8
11,2
4,8
3,8
1,8
1,3
8,7
4,1
14,5
1,8
13,5
3,5
0,1
6,3
1,1
0,2
0,1
1,5
1,0
1,3
0,1
0,6
0,4
2,0
100,0
Nedbank Group
Dec 2019
Change
(%)
Risk
weighting1
(%)
Downturn
expected
loss (dEL)2
(Rm)
BEEL3
(Rm)
(Rm)
9 993
793 243
40,5
44,9
112,8
32,1
65,5
50,8
71,6
29,2
10,1
52,0
25,1
62,1
49,1
40,3
92,5
50,0
82,4
95,6
70,7
94,3
61,1
19,9
40,5
42,0
72,4
67,2
11,3
12,8
26,8
6,4
5,1
12,0
(5,5)
32,2
13,6
134,3
4,9
5,5
9,0
(4,1)
34,4
3,4
33,3
(15,3)
27,0
7,1
6,5
(32,4)
1,3
120,8
14,5
67,1
1,3
19,8
9,9
186 575
6 424
101 610
44 247
32 812
17 967
9 193
73 653
17 026
132 751
16 194
119 014
35 303
474
58 693
7 884
1 736
640
28
13 971
13 660
12 762
331
5 204
2 477
152
24 083
876 171
7 268
1 108
124
316
168
238
118
5
19
66
706
776
3 130
494
867
133
88
289
15
1 348
1 318
5 182
753
–
–
7 268
9 993
17 261
7 268
9 993
(17 358)
(97)
SUPPLEMENTARY
INFORMATION
Nedbank Group
Dec 2018
Mix
(%)
90,5
21,3
0,7
11,6
5,1
3,7
2,1
1,0
8,4
1,9
15,2
1,8
13,6
4,0
0,5
6,8
0,9
0,2
0,1
1,6
1,6
1,5
0,6
0,3
2,7
100
Downturn
expected
loss (dEL)2
6 851
959
119
220
146
214
52
6
17
89
624
786
3 122
497
–
6 851
BEEL3
(Rm)
8 759
496
110
154
147
1 287
1 457
4 470
638
–
8 759
15 610
6 851
8 759
(14 860)
750
NEDBANK GROUP – ANNUAL RESULTS 2019
145
NEDBANK LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December
Rm
Interest and similar income
Interest expense and similar charges
Net interest income
Impairments charge on financial instruments
Income from lending activities
Non-interest revenue
Operating income
Total operating expenses
Indirect taxation
Profit from operations before non-trading and capital items
Non-trading and capital items
Profit from operations
Share of income/(losses) of associate companies and joint arrangements
Profit before direct taxation
Total direct taxation
Direct taxation
Taxation on non-trading and capital items
Profit for the year
Other comprehensive income/(losses) net of taxation
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Debt investments at FVOCI – net change in fair value
Items that may not subsequently be reclassified to profit or loss
Remeasurements on long-term employee benefit assets
Gains/(Losses) on property revaluations
Total comprehensive income for the year
Profit attributable to:
– Ordinary and preference equity holders
– Non-controlling interest – ordinary shareholders
Profit for the year
Total comprehensive income attributable to:
– Ordinary and preference equity holders
– Non-controlling interest – ordinary shareholders
Total comprehensive income for the year
Headline earnings reconciliation
Profit attributable to ordinary and preference equity holders
Less: Non-headline earnings items net of taxation
Non-trading and capital items
Taxation on non-trading and capital items
Headline earnings attributable to ordinary and preference equity holders
2019
79 240
51 888
27 352
5 953
21 399
20 905
42 304
27 891
961
13 452
(424)
13 028
121
13 149
3 076
3 205
(129)
10 073
144
(37)
(294)
330
145
10 217
10 087
(14)
10 073
10 231
(14)
10 217
10 087
(295)
(424)
129
10 382
2018
72 739
46 774
25 965
3 547
22 418
20 884
43 302
27 616
804
14 882
(164)
14 718
(83)
14 635
3 854
3 899
(45)
10 781
(368)
70
7
(345)
(100)
10 413
10 765
16
10 781
10 397
16
10 413
10 765
(119)
(164)
45
10 884
146
NEDBANK GROUP – ANNUAL RESULTS 2019
NEDBANK LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December
SUPPLEMENTARY
INFORMATION
Rm
Assets
Cash and cash equivalents
Other short-term securities
Derivative financial instruments
Government securities
Other dated securities
Loans and advances to clients
Trading loans and advances
Loans and advances to banks
Other assets
Current taxation assets
Investment securities
Non-current assets held for sale
Investments in associate companies
Deferred taxation assets
Investment property
Property and equipment
Long-term employee benefit assets
Mandatory reserve deposits with central banks
Intangible assets
Total assets
Total equity and liabilities
Ordinary share capital
Ordinary share premium
Reserves
Total equity attributable to ordinary equity holders
Preference share capital and premium
Additional tier 1 capital instruments
Non-controlling interest attributable to ordinary shareholders
Holders of preference shares
Total equity
Derivative financial instruments
Amounts owed to depositors
Other liabilities
Current taxation liabilities
Deferred taxation liabilities
Long-term employee benefit liabilities
Long-term debt instruments
Total liabilities
Total equity and liabilities
NEDBANK LIMITED
CONSOLIDATED FINANCIAL HIGHLIGHTS
for the year ended 31 December
ROE (%)
ROA (%)
NII to average interest-earning banking assets (%)
CLR – banking advances (%)
Cost-to-income ratio
2019
2018
8 199
42 395
34 923
96 536
31 126
735 886
32 678
18 546
10 544
213
9 007
90
1 229
42
56
10 403
5 505
21 424
9 508
7 931
57 844
22 412
70 330
25 793
691 260
23 637
10 895
12 040
105
6 787
305
786
40
8 367
4 764
19 789
8 538
1 068 310
971 623
28
19 182
53 582
72 792
3 561
6 850
9
7
83 219
27 621
881 297
13 473
42
645
2 401
59 612
985 091
1 068 310
28
19 182
49 636
68 846
3 561
3 416
23
561
76 407
19 761
806 487
10 414
272
224
2 648
55 410
895 216
971 623
2019
15,1
1,04
3,45
0,83
57,7
2018
16,6
1,19
3,57
0,54
58,9
NEDBANK GROUP – ANNUAL RESULTS 2019
147
DEFINITIONS
12-month ECL This ECL represents an ECL that results from a default event on financial instruments occurring within the 12 months
after the reporting date (or a shorter period if the expected life of the financial instrument is less than 12-months), weighted by the
probability of that default occurring.
Assets under administration (AUA) (Rm) Market value of assets held in custody on behalf of clients.
Assets under management (AUM) (Rm) Market value of assets managed on behalf of clients.
Common-equity tier 1 (CET1) capital adequacy ratio (%) CET1 regulatory capital, including unappropriated profit, as a percentage of
total risk-weighted assets.
Cost-to-income ratio (%) Total operating expenses as a percentage of total income, being net interest income, non-interest revenue and
share of profits or losses from associates and joint arrangements.
Coverage (%) On-balance-sheet ECLs divided by gross banking loans and advances. Coverage excludes ECLs on off-balance-sheet
amounts, ECL and gross banking loans and advances on the fair value through other comprehensive income (FVOCI) portfolio and
loans and advances measured at fair value through profit or loss (FVTPL).
Credit loss ratio (CLR) – (% or bps) ECL charge on banking loans and advances as a percentage of daily average gross banking loans and
advances. Includes the ECL recognised in respect of the off-balance-sheet portion of loans and advances.
Default Default occurs in respect of a particular client in the following instances:
• When the bank considers that the client is unlikely to pay its credit obligations to the bank in full without the bank having recourse
to actions such as realising security (if held).
• When the client is past due for more than 90 days on any material credit obligation to the bank. Overdrafts will be considered
as being past due if the client has breached an advised limit or has been advised of a limit smaller than the current
outstanding amount.
•
In terms of Nedbank‘s Group Credit Policy, when the client is placed under business rescue in accordance with the Companies
Act, 71 of 2008, and when the client requests a restructure of his facilities as a result of financial distress, except where debtor
substitution is allowable in terms of the regulations.
At a minimum a default is deemed to have occurred where a material obligation is past due for more than 90 days or a client has
exceeded an advised limit for more than 90 days. A specific impairment is raised against such a credit exposure due to a significant
perceived decline in the credit quality.
Diluted headline earnings per share (DHEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares,
adjusted for potential dilutive ordinary shares.
Dividend cover (times) Headline earnings per share divided by dividend per share.
Economic profit (EP) (Rm) Headline earnings less the cost of equity (total equity attributable to equity holders of the parent, less goodwill,
multiplied by the group's cost-of-equity percentage).
Effective taxation rate (%) Direct taxation as a percentage of profit before direct taxation, excluding non-trading and capital items.
Earnings per share (EPS) (cents) Earnings attributable to ordinary shareholders, divided by the weighted-average number of ordinary
shares in issue.
Forward-looking economic expectations The impact of forecast macroeconomic expectations in determining significant increase in
credit risk (SICR) and the measurement of ECL.
Gross operating income growth rate less expenses growth rate (JAWS ratio) (%) Measure of the extent to which the total income
growth rate exceeds the total operating expenses growth rate.
Headline earnings (Rm) The profit attributable to equity holders of the parent, excluding specific separately identifiable
remeasurements, net of related tax and non-controlling interests.
Headline earnings per share (HEPS) (cents) Headline earnings divided by the weighted-average number of ordinary shares in issue.
Lifetime ECL An ECL on any default event between the reporting date and the end of the lifetime of the financial asset.
Life insurance embedded value (Rm) The embedded value (EV) of the covered business is the discounted value of the projected future
after-tax shareholder earnings arising from covered business in force at the valuation date, plus the adjusted net worth.
Life insurance value of new business (Rm) A measure of the value added to a company as a result of writing new business. Value of new
business (VNB) is calculated as the discounted value, at the valuation date, of projected after-tax shareholder profit from covered
new business that commenced during the reporting period, net of frictional costs and the cost of non-hedgeable risk associated with
writing new business, using economic assumptions at the start of the reporting period.
148
NEDBANK GROUP – ANNUAL RESULTS 2019
DEFINITIONS &
ABBREVIATIONS
Net asset value (NAV) (Rm) Total equity attributable to equity holders of the parent.
Net asset value (NAV) per share (cents) NAV divided by the number of shares in issue, excluding shares held by group entities at the end
of the period.
Net interest income (NII) to average interest-earning banking assets (AIEBA) (%) NII as a percentage of daily average total assets,
excluding trading assets. Also called net interest margin (NIM).
Net monetary gain/(loss) (Rm) Represents the gain or loss in purchasing power of the net monetary position (monetary assets less
monetary liabilities) of an entity operating in a hyperinflation environment.
Non-interest revenue (NIR) to total income (%) NIR as a percentage of operating income, excluding the impairments charge on loans
and advances.
Number of shares listed (number) Number of ordinary shares in issue, as listed on the JSE.
Off-balance-sheet exposure Undrawn loan commitments, guarantees and similar arrangements that expose the group to credit risk.
Ordinary dividends declared per share (cents) Total dividends to ordinary shareholders declared in respect of the current period.
Performing stage 3 loans and advances (Rm) Loans that would otherwise not be in default, but are classified as defaulted due to
regulatory requirements, ie directive 7 and the new curing definition.
Preprovisioning operating profit (PPOP) (Rm) Headline earnings plus direct taxation plus an impairments charge on loans and
advances.
Profit attributable to equity holders of the parent (Rm) Profit for the period less non-controlling interests pertaining to ordinary
shareholders, preference shareholders and additional tier 1 capital instrument noteholders.
Profit for the period (Rm) Income statement profit attributable to ordinary shareholders of the parent, before non-controlling interests.
Return on equity (ROE) (%) Headline earnings as a percentage of daily average ordinary shareholders' equity.
Return on equity (ROE) (excluding goodwill) (%) Headline earnings as a percentage of daily average ordinary shareholders' equity
less goodwill.
Return on tangible equity (%) Headline earnings as a percentage of daily average ordinary shareholders' equity less intangible assets.
Risk-weighted assets (RWA) (Rm) On-balance-sheet and off-balance-sheet exposures after applying prescribed risk weightings
according to the relative risk of the counterparty.
Stage 1 Financial assets for which the credit risk (risk of default) at the reporting date has not significantly increased since
initial recognition.
Stage 2 Financial assets for which the credit risk (risk of default) at the reporting date has significantly increased since initial recognition.
Stage 3 (Defaulted loans and advances, non-performing defaulted advances) Any advance or group of loans and advances that
has triggered the Basel III definition of default criteria and is in line with the revised SA banking regulations. For retail portfolios
this is product-centred and a default would therefore be specific to a client or borrower account (a specific advance). For all other
portfolios, except specialised lending, it is client- or borrower-centred, meaning that should any transaction within a borrowing group
default, all transactions within the borrowing group would be treated as having defaulted. At a minimum a default is deemed to
have occurred where a material obligation is past due for more than 90 days or a client has exceeded an advised limit for more than
90 days. A specific impairment is raised against such a credit exposure due to a significant perceived decline in the credit quality.
Stage 3 ECL (Rm) ECL for banking loans and advances that have been classified as stage 3 advances and specifically impaired, net of the
present value of estimated recoveries.
Tangible net asset value (Rm) Equity attributable to equity holders of the parent, excluding intangible assets.
Tangible net asset value per share (cents) Tangible net asset value (NAV) divided by the number of shares in issue, excluding shares held
by group entities at the end of the period.
Tier 1 capital adequacy ratio (CAR) (%) Tier 1 regulatory capital, including unappropriated profit, as a percentage of
total risk-weighted assets.
Total capital adequacy ratio (CAR) (%) Total regulatory capital, including unappropriated profit, as a percentage of total risk-weighted
assets.
Value in use (VIU) (Rm) The present value of the future cashflows expected to be derived from an asset or cash-generating unit.
Weighted-average number of shares (number) The weighted-average number of ordinary shares in issue during the period listed on
the JSE.
NEDBANK GROUP – ANNUAL RESULTS 2019
149
ABBREVIATIONS AND ACRONYMS
AFR available financial resources
AGM annual general meeting
AI artificial intelligence
AIEBA average interest-earning banking assets
AIRB Advanced Internal Ratings-based
AMA Advanced Measurement Approach
AML anti-money-laundering
API application programme interface
AUA assets under administration
AUM assets under management
BBBEE broad-based black economic empowerment
BEE black economic empowerment
bn billion
bps basis point(s)
CAGR compound annual growth rate
CAR capital adequacy ratio
CET1 common equity tier 1
CIB Corporate and Investment Banking
CIPC Companies and Intellectual Properties Commission
CLR credit loss ratio
COE cost of equity
CPI consumer price index
CPF commercial-property finance
CSI corporate social investment
CVP client value proposition
DHEPS diluted headline earnings per share
D-SIB domestic systemically important bank
ECL expected credit loss
EE employment equity
ELB entry-level banking
EP economic profit
EPS earnings per share
ESG environmental, societal and government
EV embedded value
ETI Ecobank Transnational Incorporated
FCTR foreign currency translation reserve
FSC Financial Sector Code
FSCA Financial Sector Conduct Authority
FVOCI Fair value through other comprehensive income
FVTPL Fair value through profit or loss
GDP gross domestic product
GLAA gross loans and advances
GOI gross operating income
group Nedbank Group Limited
HE headline earnings
HEPS headline earnings per share
HQLA high-quality liquid asset(s)
IAS International Accounting Standard(s)
ICAAP Internal Capital Adequacy Assessment Process
IFRS International Financial Reporting Standard(s)
ILAAP Internal Liquidity Adequacy Assessment Process
IMF International Monetary Fund
JIBAR Johannesburg Interbank Agreed Rate
JSE JSE Limited
LAA loans and advances
LAP liquid-asset portfolio
LCR liquidity coverage ratio
LIBOR London Interbank Offered Rate
LTI long-term incentive
m million
150
NEDBANK GROUP – ANNUAL RESULTS 2019
M&A mergers and acquisitions
MFC Motor Finance Corporation (vehicle finance lending division
of Nedbank)
MRC minimum required capital
MZN Mozambican Metical
NAFEX The Nigerian Autonomous Foreign Exchange Rate
Fixing Methodology
NAR Nedbank Africa Regions
NCA National Credit Act, 34 of 2005
NCD negotiable certificate of deposit
NCOF net cash outflows
NGN Nigerian naira
NII net interest income
NIM net interest margin
NIR non-interest revenue
NPL non-performing loan(s)
NPS Net Promoter Score
NSFR net stable funding ratio
nWoW New Ways of Work
OCI other comprehensive income
OM Old Mutual
PAT profit after tax
PAYU pay as you use account
plc public listed company
PPOP preprovisioning operating profit
PRMA post-retirement medical aid
R rand
RBB Retail and Business Banking
Rbn South African rands expressed in billions
REITS real estate investment trusts
Rm South African rands expressed in millions
ROA return on total assets
ROE return on equity
RORWA return on risk-weighted assets
RPA robotic process automation
RRB Retail Relationship Banking
RTGS real-time gross settlement
RWA risk-weighted assets
SA South Africa
SAcsi The South African Customer Satisfaction Index
SADC Southern African Development Community
SAICA South African Institute of Chartered Accountants
SARB South African Reserve Bank
SDGs Sustainable Development Goals
SICR Significant increase in credit risk
SME small to mid-size enterprise
STI short-term incentive
TSA The Standardised Approach
TTC through the cycle
UK United Kingdom
US United States
USSD unstructured supplementary service data
VAF vehicle and asset finance
VaR value at risk
VIU value in use
VNB value of new business
YES Youth Employment Service
yoy year on year
ytd year to date
ZAR South African rand (currency code)
COMPANY DETAILS
NEDBANK GROUP LIMITED
Incorporated in the Republic of SA
Registration number 1966/010630/06
Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus,
135 Rivonia Road, Sandown, Sandton, 2196
PO Box 1144, Johannesburg, 2000
Transfer secretaries in SA
Link Market Services South Africa Proprietary Limited,
19 Ameshoff Street, Braamfontein, Johannesburg, 2001, SA.
PO Box 4844, Marshalltown, 2000, SA.
Namibia
Transfer Secretaries (Proprietary) Limited
Robert Mugabe Avenue No 4, Windhoek, Namibia
PO Box 2401, Windhoek, Namibia
INSTRUMENT CODES
Nedbank Group ordinary shares
NED
JSE share code:
NBK
NSX share code:
ZAE000004875
ISIN:
NDBKY
ADR code:
63975K104
ADR CUSIP:
Nedbank Limited non-redeemable
non-cumulative preference shares
JSE share code:
ISIN:
NBKP
ZAE000043667
FOR MORE INFORMATION CONTACT
INVESTOR RELATIONS
Email: NedGroupIR@nedbank.co.za
RAISIBE MORATHI
Chief Financial Officer
Tel: +27 (0)11 295 9693
ALFRED VISAGIE
Executive Head, Investor Relations
Tel: +27 (0)11 295 6249
Email: alfredv@nedbank.co.za
This announcement is available on the group’s website
at nedbankgroup.co.za, together with the following
additional information:
• Financial results presentation to analysts.
• Link to a webcast of the presentation to analysts.
For further information please contact Nedbank Group
Investor Relations at NedGroupIR@nedbank.co.za.
DISCLAIMER
Nedbank Group has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the
information contained in this document, including all information that may be defined as ‘forward-looking statements’ within the
meaning of United States securities legislation.
Forward-looking statements may be identified by words such as ‘believe’, ‘anticipate’, ‘expect’, ‘plan’, ‘estimate’, ‘intend’, ‘project’,
‘target’, ‘predict’ and ‘hope’.
Forward-looking statements are not statements of fact, but statements by the management of Nedbank Group based on its
current estimates, projections, expectations, beliefs and assumptions regarding the group’s future performance.
No assurance can be given that forward-looking statements will be correct and undue reliance should not be placed on
such statements.
The risks and uncertainties inherent in the forward-looking statements contained in this document include, but are not limited to:
changes to IFRS and the interpretations, applications and practices subject thereto as they apply to past, present and future
periods; domestic and international business and market conditions such as exchange rate and interest rate movements; changes
in the domestic and international regulatory and legislative environments; changes to domestic and international operational, social,
economic and political risks; and the effects of both current and future litigation.
Nedbank Group does not undertake to update any forward-looking statements contained in this document and does not assume
responsibility for any loss or damage arising as a result of the reliance by any party thereon, including, but not limited to, loss of
earnings, profits, or consequential loss or damage.
NEDBANK SAYS ‘YES’ TO YES
The Youth Employment Service (YES) was launched by President Cyril Ramaphosa in 2018 as
an initiative between government, business, labour and civil society to tackle a national plan
to build economic pathways for the youth with the aim of reducing the youth unemployment
rate in SA through the creation of one million work opportunities over three years. At Nedbank
we are committed to our role in the broader SA society and to delivering on our purpose of
using our financial expertise to do good. On 26 April Nedbank signed the YES CEO Pledge,
committing to go beyond business as usual by creating meaningful job opportunities for our
youth, thereby becoming the biggest corporate contributor to the YES initiative to date. Of the
more than 3 300 YES recruits for 2019, Nedbank has onboarded 250 into the organisation and
the balance was placed with our sponsored implementation partners.
nedbankgroup.co.za